The Mutual Fund
organizations are taking active part in financial inclusiveness and they are
promoting investment habit among the investors. Presently there are 37 Asset
Management Companies (AMCs) that comprise the mutual fund industry and manage
assets over Rs 8075 billion. It is a type of professionally managed collective investment scheme that pools
money from many investors to purchase securities.
Before proceeding further on investing, we need to understand that there is a
difference between mutual fund agents and advisors.
Mutual
Fund Agent facilitates the mutual fund transaction and provides
you after sale/investment services. On the other hand, Mutual Fund Advisor provides advice on investments in mutual fund.
He studies your requirement and thus educates on mutual fund, and recommends which
mutual fund fits into your requirement, and finally reviews mutual fund
investments periodically. Certain fees need
to be paid for hiring an advisor.
A mutual fund agent is expected to provide some
services and bring convenience to an investor.
Mutual
fund Investment is a great alternative for investors to
invest in the debt and the equity market. It’s suitable for investors who do
not have the time or the expertise to track individually the market or trade. It
allows investors to diversify their portfolio investment in equity, debt and
other instruments. It also significantly mitigates the risk involved in market
trading and thus the experts manage investments on behalf of investors. Mutual funds play a vital ROLE in promoting a healthy capital
market by providing active support to secondary market and increase liquidity
of capital market and finally bring stability in financial market.
Certain roles of mutual fund can be explained
with the help of following points:-
- Mobilizes
Savings:-Mutual funds play an important role in mobilizing
savings of millions of investors throughout the country.
- InstrumentOf Investing Money:-Now-a-days bank rates have become very low
thus keeping large amount of money in bank does not give higher returns. Clients
can always invest in stock market but a common investor is not well informed
about the complexities involved in stock market movements so mutual funds play
an important role in helping common public to get higher returns.
-
Protection
To Small Investors:-A small investor is not safe in share
market. There is no such risk in mutual industry. Mutual funds help to reduce
the risk of investing in stocks by spreading or diversifying the investments.
- Tax Benefit :-Investors in mutual funds enjoy tax benefits since the dividend received
by investors is tax free. Tax is exempted on the income received on units of
mutual funds and UTI
- Diversification:-Investment
in mutual funds enables investors to spread out and minimize the risks till
certain extent. The diversification helps to reduce risk because all the stocks
do not decline at same time. Thus investors are very much assured of average
income and this is not possible in other sources.
- Multi
- Purpose Service:-Mutual funds introduce variety of
innovative schemes containing various benefits since it meet the needs of
different types of investors in terms of dividend distribution, investment,
liquidity etc.
- Boost
to Capital Market:-Mutual fund has become a capital market
intermediary and thus it bridges the gap between retail investors and capital
market. The steady growth of mutual fund industry leads to increased vibrancy
of capital market.
- Arrival
of Foreign Capital:-. Indian Mutual Fund Industries open
offshore funds in various foreign countries and secure safe investment avenues
abroad to domestic savings so Mutual funds attract foreign capital.
- Savings
For Retirement And Education:-Various schemes of funds
with their tax benefits can help the households to save for the retirements and
education of their children.
In today’s world of
Investment, uncertainty and riskiness is everywhere and anywhere. Thus greatest
contributor to the riskiness in investment is when there is a belief that there
is no risk.
People know about these uncertainties, it is not only about unawareness of investors
but today they are ready to accept such higher risk & higher uncertainty. They
feel that they have to take such risk.
Risk aversion is the crucial parameter in such sane markets.
Investors should
always prefer safety to uncertainty, all other things being constant.
Top Investments done in India: From: onemint.com
|
S.No.
|
Investment
|
Tenure
|
Expected Return
|
|
|
1
|
Bank Fixed Deposits
|
Few days to several years
|
Usually over 8%
|
|
|
2
|
Tax Saver Bank Fixed Deposits
|
5 years or more
|
 Usually over 8.5%
|
|
|
3
|
Public Provident Fund
|
15 years
|
8.80%
|
|
|
4
|
NSC IX Issue
|
10 years
|
8.90%
|
|
|
5
|
Senior Citizens Savings Scheme
|
5 years
|
9.30%
|
|
|
6
|
Monthly Income Scheme
|
5 years
|
8.50%
|
|
|
7
|
Tax Free Bonds
|
They trade on the stock exchange so you can buy or sell any
time.
|
Usually upwards of 8%
|
|
|
8
|
Fixed Maturity Plans
|
1 year or more
|
Not fixed
|
|
|
9
|
Debt mutual funds
|
Varying maturities and can be bought and sold anytime.
|
Not fixed.
|
|
|
10
|
 Corporate NCDs
|
Varying maturities
|
A Higher than fixed deposits.
|
|
|
11
|
Savings Account
|
No Maturity
|
4 – 7%
|
|
