Financial Planning Through Mutual Fund

Primary advantages of mutual funds provide a higher level of diversification, economies of scale, liquidity and managed by expert investors and the disadvantage is investors in a mutual fund must pay various fees and expenses.

A mutual fund is a proficient investment management fund where the money comes from many investors to purchase securities.

What is a Mutual Fund?

A mutual fund money from numerous investors investing in a mutual fund can be a lot easier than buying and selling their individual stocks and bonds. Investments are chosen and analysis by the experts for portfolio service including with bonds, stocks and money market instruments.

Mutual funds give the best option to invest a small amount of money, the advantage of a large cash invested by shareholders, funds have gain and loss on a market basis, when the similar amount they have invested in the market.

Why should you invest in mutual funds?

Choice: there are three types of options to invest your money through by SIP, STP and SWP where you can invest and withdraw your money as per needs.

Diversification: is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk, a portfolio constructed with a different kind of investments yield higher returns, lower risk than any individual investment found within the portfolio.

Online Transaction: manage any kind of mutual fund account through by online portal or smartphone app and no paperwork required.

Safe & Convenient: Investor can alternate their structure in investments according to the liquidity and taxation requirements. additionally, an investor can withdraw their investment fully or partially, from mutual fund account, all transactions are safe and secure through by bank authority only.

Tax Savings: ELSS Mutual Fund Schemes deduction in investment through by regulation of income tax act and other things, where ELSS scheme minimum lock-in period of 3 years inside all tax saving instruments.

Well Regulated: Mutual Funds are regulated by AMC, SEBI or RBI (the AMC is promoted by a bank), and each mutual fund has a board of directors who represent the unitholders interests in the mutual funds.

Wide Choice: Variety of mutual fund schemes are offered by AMC institutions, many schemes are available with risk and return (market proportion) in various schemes.

Mutual Fund Objectives

A most common objective of the investment is growing, the primary objective of any growth fund is capital monetary over the medium to long-term, mutual funds are generally invested primarily in small to large-cap stocks.

Described as a pool of money that is collected from several investors and invested in bonds, stocks, money market instruments and other types of securities, there are many people who individually invest in bonds and stocks but with mutual funds, the work is done by the mutual fund unit.

The Benefits of Mutual Fund

  • – Tax efficiency
  • – Expert management
  • – Automated payments
  • – Liquidity and safety
  • – Quick and painless process
  • – Onetime or regular investment
  • – Less cost for bulk transactions
  • – Invest in smaller denominations


The money market is a key component of a national financial market and comprises various types of instruments designed to perform specific functions. Key actions performed by various instruments traded in money markets include borrowing short term, lending as well as buying and selling instruments with an initial maturity of up to 1 year.

Fund managers usually consider the credit rating of the instrument before investing in them and prefer to invest in instruments with a higher credit rating. Debt funds can also act as a cushion towards an all-equity portfolio. These are usually all-weather funds as they are considered to be less risky as compared to their equity counterparts and are an alternative to investors keen in holding fixed income source.

Equity funds are a broad category of funds such as large-cap, mid-cap, small-cap stocks, are called multi-cap funds, based on investing wherein the fund manager modifies the portfolio composition to suit market movements. Equity funds that follow a particular index are called index funds. These are passively-managed funds that invest in the same companies, in the exact same proportions, that make up the index.

A balanced fund combines a stock, bond and money market elemental in a single portfolio, and these hybrid funds noted to a relatively stable mix of stocks and bonds that reflects either a moderate, higher equity or fixed income.

An index fund is a type of mutual fund with a portfolio tool to match or track the components of a market index, and index mutual funds provides broad market exposure, low operating expenses and low portfolio turnover. These funds adhere to specific rules or standards that stay in place no matter the state of the markets.

There are some classes of a fund that cover all types of specialty funds. A sector fund focus on a particular industry or part of the economy, regional fund limit their investments to specific geographical areas of the globe. Another is a combination regional funds join with the strategies of sector funds and a tech fund focused on India based companies, and a fund might yield high returns, but its success or downfall would depend both on the business side of the technology.

An investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as a multi-manager investment. It invests only in funds managed by the same investment company.