Skip to main content

Long Term Wealth Creation with Mutual Funds

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 



Mutual funds combine fund management expertise, reduction of volatility and lower costs to give returns to investors. While some investors use mutual funds for a regular source of income, there is a large number of investors who invest in mutual funds for creating wealth.


Here are some basics about which types of mutual funds could be used for building a large corpus over the long run:

 
Debt funds


As the name suggests, these are the funds which mainly invest in debt instruments like government securities (gilts) and other bonds, treasury bills, certificates of deposit (CDs), commerc ial papers (CPs), money market instruments, debentures, etc. If you notice, at the time of investing itself in each of these instruments, an investor usually has some idea about the type of return he/she may get either after a fixed interval (like each year/half-year/ quarter) or at the time of maturity. So naturally debt schemes also give a return that one could reasonably guess while investing.

The instruments in which these funds invest usually do not show much volatility on a daily basis, as compared to stocks. As a result, debt funds also show less volatility compared to equity funds and bring stability to one's portfolio.


In India, investments in debt funds usually enjoy indexation benefits, which in other terms is the government's way of compensating an investor from the loss that accrues to his/her investments in debt funds because of inflation in the country. This is one of the advantages for debt funds that helps investors build we a l t h t h ro u g h t h e s e schemes because, to build wealth, one needs to grow money over the long term and the same should beat the rate of inflation over that period of time.


Within debt funds, there are various types: Liquid funds, long-, medium- and short-term bond funds, gilt funds, fixed maturity plans, etc. Of these, liquid funds are the ones in which you can keep your money if your investment horizon is from a few days to, say, about six months. These are usually used to park your money for the short term. These are not the funds that one can use to build long-term wealth. Compared to liquid funds, returns from other types of debt funds are usually higher.


Equity funds


Equity funds invest most of their corpus in stocks. These are more risky schemes than debt funds and usually also show a higher level of volatility. But financial planners and advisers always bank on equity funds for long-term wealth creation. This is mainly because, going by historical data, stocks have always given returns that have beaten the rate of inflation in the long run. So when it comes to building wealth, equity funds are the preferred investment vehicles compared to debt funds.


In India, all equity funds also enjoy exemptions from long-term capital gains tax, which make these funds even more eligible to grow one's wealth. Financial planners and advisers say that if investors have the risk appetite and have time on their side, then they should always opt for equity funds over debt funds for wealth creation.


Within equity funds, there are various types of schemes:

Diversified , large-, mid- and smallcaps, equity-linked savings schemes (ELSS), sectoral funds, etc.

Of these, large-cap schemes usually show less volatility than mid- and small-cap funds as they are more risky than large-cap ones.


For wealth creation, going by the risk-taking ability of each investor, financial planners and advisers suggest a portfolio of funds that is usually a mix of diversified, large-, mid- and smallcap schemes.
An ELSS is often mixed with other types of schemes to give some extra tax advantage since these funds are approved by the government for tax rebates under certain conditions.


On the other hand, sectoral funds — which invest in a particular sector like IT, FMCG, banking, etc — are never used for long-term wealth creation. This is because a particular sector never shows a secular upward movement but displays a more cyclical nature.


Other types


There are some other types of funds also, like monthly income schemes (MIS), which are mainly used for generating regular income. And then there are balanced funds. Although, ideally, these should have equity and debt in equal ratio, most balanced funds have at least 65% equity to take advantage of income tax rules. They are more volatile and risky than they should be, and are not the ideal vehicles for building wealth.

The quantum of dividend shall be Rs 0.0389 per unit. The record date has been fixed as April 03, 2014.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...
Read more

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...
Read more

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...
Read more

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now