What Are Mutual Funds?
A Mutual Fund is an investment product that pools money from a group of investors and invest in targeted asset class with certain investment objective. An investor of a Mutual Fund becomes the stakeholder of the underlying assets and the income generated from these underlying holdings are distributed amongst the investors proportionately. Mutual Funds can be an ideal investment choice, given their ease of use and advantages.
Benefits Of Investing In Mutual Funds
Convenience
Proficient Expertise
Diversification
Begin With Small Investments
Tax Advantages
Investing in top mutual funds can be a straightforward and hassle-free exercise. Swyom provides an online platform and operational support to make it easier for investors. The whole process is paperless and digital, and you can complete it from the comfort of your home. Once you begin your investment journey with SWYOM, you can follow your holdings on a real time basis, decide on rebalancing if needed, add or redeem funds and even start on SIP through your computer or smartphone.
Funds Based On Asset Class
Equity Funds
Equity funds invest most of your money in stocks. Capital appreciation is an essential objective for these funds. But since the returns on equity funds are linked to market movements, they hold higher risk. Equity funds can be the right choice for long-term goals – retirement planning or buying a house – due to their trouble with the investment spread over a long period.
Debt Funds
Debt funds (also known as fixed-income funds) invest in assets like corporate bonds, government securities, and money market instruments. These funds typically aim to offer regular returns to the investor and are considered moderately stable. Debt funds are ideal if you want to earn a steady income and are hesitant to take a considerable risk.
Hybrid Funds
Debt funds (also known as fixed-income funds) invest in assets like corporate bonds, government securities, and money market instruments. These funds typically aim to offer regular returns to the investor and are considered moderately stable. Debt funds are ideal if you want to earn a steady income and are hesitant to take a considerable risk.
- Conservative Hybrid Fund : The scheme invests around 75-90% of assets in debt instruments and just about 10-25% in equity or equity-related instruments.
- Equity Savings Fund : The scheme invests around 75-90% of assets in debt instruments and just about 10-25% in equity or equity-related instruments.
- Balanced Hybrid Fund : The scheme invests around 75-90% of assets in debt instruments and just about 10-25% in equity or equity-related instruments.
- Arbitrage Fund : The scheme invests around 75-90% of assets in debt instruments and just about 10-25% in equity or equity-related instruments.
- Aggressive Hybrid Fund : Invests between 65-80% in equities and between 20-35% in debt instruments.
- Multi-Asset Allocation : Invests your funds in at least three asset classes with a minimum budget of 10% for each of all three asset classes.
Dynamic Asset Allocation Fund
Invests in debt and equity, and the fund allocation is managed based on pre-defined market indicators.
Build wealth in the long term with us.
Swyom Capital aims to simplify mutual fund investing by
efficiently managing funds and assisting investors.
efficiently managing funds and assisting investors.
How Do Mutual Funds Work?
A Mutual Fund is run by Asset Management Company as a trust which collects money from various like-minded investors. Asset Management Companies (AMCs) may manage many mutual fund schemes. Each scheme has a specific investment objective catering to distinct investment needs. Based on the fund’s purpose, the money collected from investors is placed in various avenues such as stocks, gold, bonds, and other securities. The Fund Manager of these schemes aims to earn optimum returns on the investment, oversees the market and invests accordingly. The income generated by the fund is divided and distributed among the investors proportionately.
FAQ’s
Let us compare both to get a fair idea of what suits your investment plan more;
- Risk : The most significant benefit of an FD is the guaranteed and fixed returns in the form of interest. In mutual funds, there is no guarantee and the loss and profit move per the market’s volatility.
- ROI Money : FDs have a guaranteed return, whereas, in mutual funds, there is no guarantee of return on the investment as it is dependent on the market. Although, in the long run, they earn much higher returns than FD.
- Liquidity : Individuals and corporates.
- Tax Liability : The bank FD returns are taxed as per your income bracket upon maturity. On the other hand, mutual funds enjoy tax benefits and fixed indexation tax rates on the returns. Now you know where to drop by if you are looking for the best mutual funds to invest in.
While no investment in the world is risk-free, the mutual funds’ investments plan of SWYOM which is an online mutual fund investment platform is considered a safe investment because of three main reasons:
It is not a flight-by-night scheme, and no one will run away with all your money. They are safe as mutual funds companies are regulated and supervised by the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI).
The strategy behind mutual funds is to earn higher returns that are also tax efficient. They do not guarantee capital protection or fixed returns but provide higher returns than traditional investment instruments. They result in greater market exposure and are managed by experienced finance managers.
They are highly taxed efficiently as they are taxed in a way that doesn’t touch the returns earned. They are best for long-term investments, but in the short term also reap this tax benefit. The risk can be managed very well as the portfolio is usually diverse, with a mix of equity, bonds, and debts. Each promises different financial goals.
These are highly liquid assets and can be withdrawn at any time. While sales and purchases can occur at any time of the day, the money is generally transferred out at the market day’s close.
The minimum investment possible is Rs. 100 in SIP and Rs. 1,000 in a lump sum, but at the very least, Rs. 500 is suggested. Contact SWYOM today to know everything about how to invest in mutual funds in India.
As a long-term asset, mutual funds can be highly profitable. The average returns on investment based on the top 20 performing ones over the last two decades are annualized at 9.75%.