Investing through mutualInvesting through mutual funds has become the most popular way of savings now-a-days. Mutual fund is a professionally managed scheme wherein they pool money from different numerous investors to be invested in bonds, stocks & other securities. Your investments done through MFs are safe as all the mutual fund operators are registered with SEBI & work within framework created to protect the investors. 

Advantages Of Investing In Mutual Funds  

Mutual funds have become a very popular investment option in India and this trend still continues with new funds and schemes being introduced in the market regularly. Some of the key reasons why people invest in mutual funds are outlined below.  

Professional management: Mutual funds are managed by fund managers of asset management companies. These managers employ their investment expertise to minimise risks and maximise returns to investors. Individuals often find it difficult to decide which assets to invest their savings in due to lack of financial knowledge. 

Diversification of risks: Since mutual funds invest in a number of securities, risk is diversified. The chances of all stocks performing badly at the same time is low. Losses suffered on some stocks are offset by gains made on others. This leads to minimization of risks. 

Affordable investment option: For those who don’t have sizeable amounts to invest in direct equity or other instruments that require a high initial investment, mutual funds make for an affordable investment avenue. Also, transaction costs are spread out over a number of investors thereby lowering individual costs. 

Focused investments: All mutual funds feature schemes clearly specifying which assets are targeted for investments, allowing investors to direct savings to different asset classes in an organised and focused manner. It also gives investors access to certain securities otherwise unavailable to them e.g. foreign sectors or foreign securities which cannot be invested in by individuals. 

Choice of assets: There are various types of funds e.g. equity funds, debt funds, money market funds, hybrid funds, sector funds, regional funds, fund of funds, index funds etc. giving investors a wide range of choice. 

Easy purchase and redemption: Fund units can be easily bought and sold at prevailing unit prices or NAVs. Unless there’s a lock-in period, it is easy for investors to buy into or out of a fund thereby providing liquidity. 

Tax benefits: A number of funds/schemes have been designed to act as tax-saving instruments e.g. ELSS or equity linked saving schemes. Investments made in these schemes qualify for income tax deductions. 

High returns: Mutual funds have been known to provide good returns on medium and long-term investments since investors can diversify risk to enhance overall returns. 

Regulated investments: All funds come under the purview of SEBI (Securities Exchange Board of India) which ensures dealings are as per regulations. This provides an element of safety to investments made. 

Easy to track: It can be hard for investors to regularly review their investment portfolios. Mutual funds provide clear statements of all investments which makes it easy for investors to keep a tab on. Hybrid or balanced funds provide investors an avenue to access both equity and debt funds at one go in a proportion of choice. 

SIP options: Systematic Investment Plans let individuals invest small amounts on a regular basis to avail benefits of rupee cost averaging. It’s an alternative to those who cannot invest lump sum amounts thereby appealing to investors across income levels. Mutual funds accept initial investments as low as Rs.500. 

Flexibility through fund switching: Many funds offer investors flexibility by letting investors switch between schemes or between funds to avail better returns

Insurance contracts that do not come under the ambit of life insurance are called general insurance. The different forms of general insurance are fire, marine, motor, accident and other miscellaneous non-life insurance.

The tangible assets are susceptible to damages and a need to protect the economic value of the assets is needed. For this purpose, general insurance products are bought as they provide protection against unforeseeable contingencies like damage and loss of the asset. Like life insurance, general insurance products come at a price in the form of premium.

Fixed deposit accounts are ideal for investors who are averse to taking risks. Interest is accumulated on the deposited amount over a fixed period of time. The interest rate for deposits less than Rs.2 crore range from 3.00% p.a. (for deposits less than one year) to 9.54% p.a. (for deposits of up to 10 years). This depends on the type of financial institution as well (public sector, private sector, or small finance banks). The tenure can range from 7 days to 10 years. Senior citizens are offered higher interest rates. This is usually in the range of 0.25% to 0.65% more than the existing rates.

Types of Fixed Deposits

• Normal Fixed Deposits

  • Deposit money for a fixed tenure.

  • Tenure can range from 7 days to 10 years.

  • Interest rates higher than a normal savings account.

• Tax-Saving Fixed Deposits

  • Tax exemption on the principal deposit amount of up to Rs.1.5 lakh in a calendar year.

  • Lock-in period of 5 years within which you cannot withdraw the amount.

  • Allows only one-time lumpsum deposit.

• Senior Citizens’ Fixed Deposits

  • Applicable for individuals above 60 years of age.

  • Senior citizens are eligible for special rates.

  • Flexible tenures.

• Cumulative Fixed Deposits

  • Interest is compounded every quarter or year and paid at the time of maturity.

  • Helps substantially grow your savings.

• Non-Cumulative Fixed Deposits

  • Interest is paid out monthly, quarterly, half-yearly, or annually, as per your choice.

  • Better bet for pensioners looking for a regular source of income.

• Flexi Fixed Deposits

  • Fixed deposit linked to your bank account.

  • Money shuttles between your FD and savings account.

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. Bonds can be in mutual funds or can be in private investing where a person would give a loan to a company or the government.

The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the secondary market.