5 things to understand before investing in Mutual Funds India

Have you heard the famous slogan “Mutual funds Sahi hai”?

In the past 2-3 years, mutual funds India has gained a lot of attention.

But why is this getting such special attention now?

Earlier, the general public had less knowledge about mutual fund schemes and mutual fund companies in India. But gradually, people started understanding how to use the mutual fund for tax saving, future planning, and even retirement.

Mutual Funds India
Mutual Funds India

Here are some of the most popular Mutual Funds India:

  • Reliance mutual fund
  • UTI mutual fund
  • L&T mutual fund
  • Aditya Birla mutual fund
  • SBI mutual fund
  • HDFC mutual fund
  • ICICI mutual fund
  • KOTAK mutual fund
  • AXIS mutual fund
  • TATA mutual fund
  • DSP mutual fund
  • IDFC mutual fund
  • Sundaram mutual fund
  • Nippon mutual fund
  • Mirae mutual fund
  • Birla sun life mutual fund
  • Franklin Templeton mutual fund,
  • Motilal Oswal mutual fund and many more.

You can also read: Step by Step process on how to file income tax return online in 2020

While everyone wants mutual fund benefits, it’s best to understand 5 important things before you start investing in mutual funds. Once you understand these things, it will help you make the right decisions for all your investments.

1. Existence & Fund’s historical performance:

While you plan to invest in any mutual fund of India, it is best to start your research by understanding the existence of the fund. When a fund has been in the market for a long duration, it becomes easy to check the historical performance of that fund.

With this, you will be able to understand what kind of mutual fund returns you can expect if you choose to invest your hard-earned money.

2. AUM (Assets under Management):

In simple words, a large AUM shows that investors trust in this fund and have hence invested in it. This has more to do with boosting investment sentiment in the customer. You can use this point for mutual fund comparison.

3. Entry & Exit load:

Entry load is the charge applied on you when you enter the fund and exit load (1%) is when you withdraw from the fund. However, the exit load is 0% when you withdraw post 1 year from the purchase date.

There are various mutual fund types in the market and recently, a few funds don’ charge any kind of exit load to the customer. This means you can invest and withdraw even within a few days/weeks or months.

4. Background check about the Fund Manager:

Apart from checking mutual fund ranking and mutual fund performance, it is considered wise to run a background check on the Fund manager who’s handling your mutual fund. If the fund manager has a good history, is ethical, and has vast experience in Finance, then you can consider your hard-earned money to be in good hands.

5. Check the Investment Allocation

What is your main goal? If you have clear plans with your money, then check the investment allocation of your mutual fund. It will either be just debt, just equity, or a mix of debt + equity. Choose the right mix as per your needs and expectations.

Overall, Mutual funds are one of the best ways to invest and plan for your future. You can set goals like buying a car, sponsoring a trip, education, wedding, etc through mutual fund investments. It’s all about the right mutual fund redemption timing. So plan well, research, and then watch your wealth grow with time.

You can also read: Top 5 Short Term Investment plans with high returns in India

FAQs on Mutual Funds India:

In mutual fund what is direct plan?

A direct plan in a mutual fund is for those who prefer to invest directly in a mutual fund without the help/service of any distributor/agent. You save on cost too as there is no commission/brokerage involved.

What is the NAV of a mutual fund?

Net asset value (NAV) tells you the market value of each share of the fund. Mutual fund NAV is calculated by dividing the total value of assets in a portfolio minus liabilities.

Is SIP a mutual fund?

SIP is an amazing method of investing in a mutual fund. It is not a type of mutual fund. Using any mutual fund app, you can utilize the mutual fund sip calculator and find out the best mutual fund with highest returns.

Are mutual fund returns taxable?

If you gain returns through mutual funds, they will be taxable under “Income from Capital Gains’. This tax will also differ as per the duration of your mutual fund.

Is mutual fund dividend taxable?

As mentioned above, depending on the duration of your mutual fund and your income tax bracket, the mutual fund dividend will be taxable anywhere between 0 to 43%*.

Which mutual fund gives highest return?

The best way to answer this would be to check the historical data of mutual funds. This will help you to understand which is the best mutual fund and has been giving the highest returns every 1-3 years.

Which mutual fund is best for short term?

In general, debt funds are preferred when it comes to short term investments as you can get a better return than fixed deposits while securing yourself from market volatility.

Which mutual fund to invest today?

Today, the market is volatile and hence it’s best to wait out until it shows a sign of getting better. If you still wish to invest, then it’s wise to check the best performing funds via their past performance and then invest.

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20 Comments Add yours

  1. Arti says:

    Very informative, saving this

    1. Afreen Ansari says:

      That’s great to know

      1. Lavanya says:

        The fund manager check is the most important check for me. Good post.

        1. Afreen Ansari says:

          Thanks

  2. Nils says:

    Very good summation.

    1. Afreen Ansari says:

      Thanks

  3. Anand says:

    Finance is one of the business that should be looked upon carefully.. this article is informative.

    1. Afreen Ansari says:

      Thanks

  4. Great post! recently I was looking for the best MF plan to invest in India, and I must say your post came at so right time, it helped me in clearing my so many confusions.

    1. Afreen Ansari says:

      That’s great to know

  5. Neha says:

    These are some very useful points to check about mutual funds. Thanks for sharing

    1. Afreen Ansari says:

      Always welcome

  6. Atulmaharaj says:

    Entry and Exit loads are often missed by new investors and they realize only when they are redeeming the units. Helpful post.

  7. Thats a lovely resource. Been wanting to know more about mutual funds since a long time.

    1. Afreen Ansari says:

      Glad to hear

  8. Currently Reading says:

    Very informative and helpful

  9. Ishieta says:

    This is a helpful post with a lot of clear cut information.
    As women, we are rarely taught about finances and savings. so we have to understand and figure things out for ourselves.

    1. Afreen Ansari says:

      Indeed, its time that we take our finances ahead

  10. Poonam says:

    I take help of my husband of investing in MF. I had knew few of these points, but thanks for clarifying all of them.

    1. Afreen Ansari says:

      Happy to be helpful

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