Advantages of investing in Mutual Funds

Professional Management:
Asset Management Companies (AMC) are managed by professionals and carry out the specialized investment activity.

Diversification:
Diversification among a number of investments helps reduce the risk of any single holding.

Convenient Administration:
The facility of making investments through Individual Financial Advisors.

Return Potential:
By allocating the right asset mix Mutual Funds offer a chance of higher potential returns. The high concentration of risky assets would lead to a higher return and vice-versa.

Low Costs:
Given its size, an AMC would be in a position to negotiate better brokerage terms for the sale and purchase of its investments.

Liquidity:
Open-ended schemes offer liquidity through on-going sale and repurchase facility. Thus the investor does not have to worry about finding a buyer for their investments.

Transparency:
Information available through fact sheets, offer documents, annual reports and promotional materials helps provide the investor with the knowledge about their investments.

Flexibility:
Mutual Funds offer flexibility in terms choosing a scheme that matches the investment to an investor's investment objective.

Choice of Schemes:
The investors can chose from various kinds of schemes available to them. The investors with a higher appetite for risk can go for more aggressive schemes while those needing a fixed sum every month can go for MIPs and so on.

Tax Benefits:
For equity funds, dividends received from equity schemes of Mutual Funds (i.e. schemes with equity exposure of more than 65%) are completely tax-free. Neither does the Mutual Fund have to pay dividend distribution fee nor does the investor have to pay income tax.

Well Regulated:
Mutual Funds in India are well regulated with SEBI monitoring the activities of the mutual funds.

Equity Linked Saving Scheme (ELSS)
Equity Linked Saving Scheme is an open-ended equity growth scheme that is offered by mutual funds in line with existing ELSS guidelines. The investments under this type of scheme are subject to a lock-in period of 3 years and, as per the Finance Act 2005, are allowed the benefit of income deduction up to Rs. 1,00,000. ELSS offers the benefits of tax saving and capital gains. Instead of spreading your investments across different instruments such as PPF, ELSS, NSC and infrastructure bonds, you can now invest the entire limit of Rs. 100,000 available under Sec 80C in ELSS.

Advantages of ELSS

Lock-in for three years prevents unnecessary withdrawals and allows your money to grow over a period of time

Investments in equity over a long-term delivers better returns than that of other savings instruments and similar to other equity schemes

Tax savings and high returns

Flexibility to Invest in small amounts through a Systematic Investment Plan

Systematic Investment Plan
Systematic Investment Plan (SIP) is a convenient way to accumulate wealth in a disciplined manner over a long-term period. It helps you to invest regularly in small installments and thereby build wealth over a period of time.

SIP is a method of investing in a mutual funds scheme. Mutual fund schemes are offered by the Asset Management companies (AMC) to customers through a distributor. A customer wanting to invest in a mutual fund scheme can avail of the Systematic Investment Plan option through Bank by giving ECS mandate.

Advantages of SIP Power of Compounding

SIP helps you to start investing at an early age to meet the greater expenses of your life.

Saving a small sum of money regularly makes money work with greater power of compounding with significant impact on wealth accumulation.

Rupee Cost Averaging

SIP minimizes the effects of investing in volatile markets.

It helps you average out your cost by generating superior returns in the long run. It reduces the risk associated with lump sum investments.

Since you get more units when the NAV drops and fewer when it rises, the cost averages out over time Thus the average cost of your investment is often reduced.

Convenience and Regularity

SIP gives you the convenience to pay through Bank Electronic clearance service (ECS) or Auto Debit.

You can decide the amount and the mutual fund scheme.

A fixed amount will automatically get debited from your account on a date specified by you.

Disciplined approach towards investment.

Since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation.

Disciplined investing is vital to earning good returns over a longer time frame.

How to invest in SIP?

Step 1: Select a mutual fund scheme of your choice with the payment option as SIP

Step 2: Decide the Investment periodicity (frequency of making payments). You can
choose to make your investment on a monthly or quarterly basis.

Step 3: Select the minimum investment amount. For instance, if you choose to invest Rs 12,000 every year with a monthly SIP Option. Therefore you would be investing Rs 1,000 every month in your fund. By the end of a year, you would have invested Rs 12,000 in your fund.

Step 4: The amount gets converted into units, depending on the Net Asset Value (NAV). NAV is the market value per unit of a fund.

Step 5: The units get accumulated over a period of time. You can stay invested till the time you wish and redeem your units when you wish to exit from the scheme. The units are redeemed at the market value (NAV) and you get back your money with returns.
For investing in SIP, all you need to call me and just fill up a simple application form.

Disclaimer
Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing