About Us

Ramjanm Prajapati is the Founder Director of Ramjanm Investment & Insurance Consultancy and also authorised Life Insurance Advisor with LIC of India. He comes with extensive experience of 37 years in the Insurance & Finance domain

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+088 130 629 8615 OR ramjanmplic@gmail.com

Tax Planning

Introduction

By purchasing one mutual fund share, a group of investors can invest in a wider variety of investment vehicles and take advantage of professional money management. Invested in individual investment instruments, mutual fund companies essentially pool the money from their investors or shareholders according to individual risk profiles, money management strategies, and financial goals. Shareholders are then able to profit (or lose) from the fund's investments.

Investing in mutual funds is becoming increasingly popular. In addition to saving and investing in fixed deposits and real estate, people are increasingly aware of mutual funds as lucrative savings and investment options. Investing in mutual funds is one of the most sought-after methods, but having little or no knowledge about it can totally scupper one's plans. We will summarize all the information you need to know about mutual funds and the benefits they provide.

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What Are The Benefits Of Investing In Mutual Funds?

  • Availability: Mutual fund investing is a simple and paperless process. A person can monitor the markets and invest based on their needs. A portfolio rebalancing method and switching between mutual fund schemes can keep returns in line with expectations.
  • Low start-up costs: Investing as little as Rs 500 a month in mutual fund schemes of your choice can help you build a diversified mutual fund portfolio. A systematic investment plan (SIP) or a lump sum can also be used for investing. A SIP, however, is able to reduce the overall cost of investment while unleashing the power of compounding in comparison with lump sum investments.
  • Efficiencies in taxes: Under Section 80C of the IT Act, you can deduct up to Rs 1.5 lakh per financial year from your taxable income for specific financial instruments, and tax-saving mutual funds are one of them. In the past few years, equity-linked savings schemes (ELSS) have become a popular tax-saving option for Indians due to their higher returns and the shortest lock-in period of three years among all Section 80C options.
  • Management of professional funds: An experienced fund manager manages your mutual fund investments with a team of researchers at his side. Your asset allocation strategy is designed by the fund manager. As part of the fund's investment objectives, the team of researchers selects suitable securities.

TYPES OF MUTUAL FUND IN INDIA

The ease, flexibility, and diversification benefits of mutual funds make them popular investments. Investors of all types can invest in mutual funds, which is one of the greatest benefits. A total of 44 mutual funds are registered in India, offering different schemes that meet the requirements of diverse investors.

Mutual funds can be categorized broadly by structure, asset class, and investment goal. Furthermore, funds can also be categorized based on risk.

  • Equity Funds: Funds that invest primarily in stocks and focus on long-term capital growth are part of this class. In addition, there are many types of equity funds that can be classified based on the size of the company.
  • Debt Funds: They provide fixed returns and are considered safe investments. Amounts invested in these types of investments include company bonds, government bonds, and fixed income assets
  • Dividend Fund: Investing in dividend-paying companies, or those that share profits with stakeholders is the purpose of this type of mutual fund. Income-producing funds are less risky than other types of funds because they generate income. It is also a sound investment because it provides regular income over time. Over appreciation.
  • Balanced funds: In addition to investing in a mix of fixed income and equities, these funds also employ a certain amount of change management. Typically, a balanced fund maintains a distribution of 60% equity and 40% fixed income. A similar type of fund is known as an "Asset Allocation Fund", which follows the same objectives as Balanced Funds, but does not have a percentage allocated to any asset class.

What is SIP?

You can invest a small amount regularly in your preferred mutual fund scheme through a systematic investment plan, also known as a SIP. When you take part in a SIP, an amount is automatically deducted from your bank account every month, which is invested in the mutual fund of your choice.

SIPs allow you to accumulate over time, rather than in a lump sum. As a result, you do not need a lot of money to start investing in mutual funds through SIPs. When you invest via a SIP, you are compelled to set aside a sum at regular intervals, which is beneficial in the long run for your financial discipline.

Describe the SIP process.

By investing in a mutual fund scheme with a SIP, you purchase a certain number of fund units corresponding to the amount you have contributed. When you invest through a SIP, you don't have to time the markets, as you gain from both bullish and bearish trends.

A market downturn causes you to purchase more fund units, while a market rally causes you to purchase fewer units. Each mutual fund's NAV is updated on a daily basis, so prices may vary from one SIP installment to another. As a result, the cost of purchase averages out over time and becomes lower. It is called rupee cost averaging. Lump-sum investments do not provide this benefit.

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