Mutual Funds

We all have various dreams that we want to realize – owning a Car, a House or going on a Vacation. Besides these, we also need to plan for Children’s Education, their Marriage and our Retirement.

Achieving these dreams may seem like climbing Mt Everest, but its possible if you prepare for it.

WHY MUTUAL FUNDS?

YOUR MONEY IN SAFE HANDS

The prime advantage of funds is that they are professionally managed by experts who have a huge amount of experience in financial sector. They use their expertise, market understanding and various tools before taking a decision

DIVERSIFY YOUR PORTFOLIO

Your financial risk is spread out when you invest in mutual funds instead of individual stocks or bonds. The idea behind diversifying is to invest in a large number of assets to cover the loss in any particular investment by gains in others.

BENEFIT FROM ECONOMIES OF SCALE

As mutual fund buys and sells large sums of securities at a time, the transaction costs are much lower than an individual would usually pay.

LIQUIDITY AND SIMPLICITY

Owning mutual funds is easy and so is converting them into cash. Just like an individual stock, a mutual fund allows you to request that your shares be redeemed at any time.

WHY INVEST THROUGH SHUBH FINANCIAL HUB

Zero FeesNo hidden charges. We earn a small fee from the mutual fund companies for the additional services we provide.

Build WealthWe pre-select only the best funds for you. Powered by technology, data, & research. No bias.

Save TaxOur portfolio of tax saving funds, gives you full tax benefit up to 1.5 lakhs, under section 80C.

Invest BetterFund selection, tax implications, re-balancing, and annual review. Shubh Financial Hub does it all

TYPES OF MUTUAL FUNDS

Equity/Growth FundsFunds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over a medium to long-term investment horizon. Equity Funds are high risk funds and their returns are linked to the stock markets. They are best suited for investors who are seeking long term growth. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified FundshThese funds provide you the benefit of diversification by investing in companies spread across sectors and market capitalisation. They are generally meant for investors who seek exposure across the market and do not want to be restricted to any particular sector.

Sector FundsThese funds invest primarily in equity shares of companies in a particular business sector or industry. While these funds may give higher returns, they are riskier as compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.

Index FundsThese funds invest in the same pattern as popular stock market indices like CNX Nifty Index and S&P BSE Sensex. The value of the index fund varies in proportion to the benchmark index. NAV of such schemes rise and fall in accordance with the rise and fall in the index. This would vary as compared with the benchmark owing to a factor known as “tracking error”.

Tax Saving FundsThese funds offer tax benefits to investors under the Income Tax Act, 2961. Opportunities provided under this scheme are in the form of tax rebates under section 80 C of the Income Tax Act, 1961. They are best suited for long investors seeking tax rebate and looking for long term growth.

Debt/Fixed Income FundsThese Funds invest predominantly in rated debt / fixed income securities like corporate bonds, debentures, government securities, commercial papers and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seeking regular and steady income. They are less risky when compared with equity funds.

Liquid/Money Market FundsThese funds invest in highly liquid money market instruments and provide easy liquidity. The period of investment in these funds could be as short as a day. They are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.

Gilt FundsThese funds invest in Central and State Government securities and are best suited for the medium to long-term investors who are averse to risk. Government securities have no default risk.

BALANCED FUNDS

These funds invest both in equity shares and debt (fixed income) instruments and strive to provide both growth and regular income. They are ideal for medium- to long-term investors willing to take moderate risks.

WAYS OF INVESTING IN MUTUAL FUNDS

You receive bonus, annual performance incentive or any lumpsum amount, you can choose to put in a lump sum amount and buy mutual fund units at once. Investing amount in lumpsum works in favour of investors having a long term investment horizon. In Short term, this method may prove disadvantageous as the performance of the investment depends majorly on the market conditions and NAV of the fund at the time of purchase.

SYSTEMATIC INVESTMENT PLAN (SIP):

Just as drops of water make an ocean, small but regular investments can go a long way in building wealth over a period of time

SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme similar to a recurring bank deposit. SIP is designed to help investors save regularly and thus accumulate wealth in a disciplined manner over the long-term, thereby ensuring a better future for you and your family. Know More

SYSTEMATIC TRANSFER PLAN (STP):

A STP enables you to switch or transfer a fixed amount of money at regular intervals from your fixed income scheme investments to designated equity and balanced schemes. In effect this is similar to a systematic investment plan, except that in a SIP the investment flows from a bank account into the fund and here it flows from one scheme to another. Effectively this process gives you the benefits of Rupee cost averaging. Know More

IS YOUR MONEY LYING IDLE IN SAVINGS/CURRENT A/C (IF YES, THEN INVEST THEM IN LIQUID FUNDS)

Advantages of Liquid funds over Saving Accounts:

1. Returns :
Liquid funds have the lowest interest rate risk among debt funds as mutual fund houses generally invest in fixed income securities with short maturity.
Liquid Fund Returns Liquid funds returns in %
Time Horizon 1 month 3 month 6 month 1 year
Average Returns 0.81 2.19 4.47 9.01
Highest Returns 0.94 2.4 4.9 9.98

Source: Value Research (Returns are as on April 11, 2014)

2. No lock in period–

Liquid funds have no lock in period and money can be withdrawn with 24 hours on request. The cut- off time on withdrawal is generally 2 P.M. If someone requests for withdrawal by 2 P.M, it is processed by 10 A.M the very next day. Liquid funds have no entry and exit loads.

3. Risk-

A liquid fund has very low risk. The maturity of the instrument can go up to 91 days. But portfolios of most liquid funds have average maturities well below that; even six or eight days sometimes. Since the instruments have very short tenures, they are not traded in the market, and instead held-to-maturity by the fund. This removes mark-to-market losses on the instruments and eliminates volatility.

4. Plans as per your needs–

Liquid funds are available in different plans like growth plans, daily dividend plan, weekly dividend plans and monthly dividend plans. Growth plans don’t declare any dividend, and appreciation of fund is reflected in higher unit value. Investors can the option to select their plan as per their convenience and liquidity needs.

5. Taxation–

Dividends received under Liquid plans are not taxed at the hands of resident individual investors but fund houses pay dividend distribution tax @28.325 per cent (including surcharge and cess). Individual investors who books gains before a year on their investment in liquid funds are taxed at the same rate as per their income slabs. Interest earned from savings accounts are also taxed at this same rate.

It is a wise decision to park your large sums lying idle in your saving/current account into liquid funds and see your money grow.