Mutual Fund Guide

Mutual Fund Guide

Mutual Funds V/s Other Investment Instruments

Even Till now people’s risk appetite are still low. Given an opportunity with market depended Mutual Fund financial product are still seen as a high risk product in comparison to products like fixed deposits (FDs), Public Provident Fund (PPF) or gold.

The later are known for capital saving and stable returns. However, mutual funds are a good alternative for short and long term and advised to enjoy a well calculated positive returns.

Mutual Funds Vs Fixed Deposits
Mutual Funds Fixed Deposits
Investing your money in various mutual funds Saving your capital
Similar returns Good returns
Returns may vary but it helps beat the inflation Constant returns
Highly liquid: Exit at any point in time is allowed. Less liquid: Exit at any point in time in not allowed.
Mutual funds vs Public Provident Fund

Public provident fund(PPF) is a great way to save your tax. ELSS(Equity Linked Saving Schemes) too offer on same lines to its customers. It can help you claim a deduction upto Rs. 1.5 lakh under 80C of the Income Tax Act.

ELSS Mutual Funds Public Provident Fund
ELSS has a minimum of 3 year locking period Minimum of 15 years as locking period
Returns are linked to Equity market. Hence, market has a maximum exposure thus achieve higher returns It’s a low risk with steady returns
Minimum investment: Rs 500 Minimum investment you can make is Rs. 500 a year
Maximum investment: There are no limit Maximum investment upto Rs. 1.5 lakh
Mutual funds vs Gold

Gold has always been an attraction to the Indian society since ages. Its attraction and demand has never faded since then. Every family buys and invests in Gold in the form of gold jewelry and gold coins. However, gold Exchange Traded Funds (ETFs) are a good substitute to physical gold and easy for online transaction. Also, gold has never been a depreciative asset. If kept in long run it will definitely fetch you good returns.

Gold ETFs Gold
Gold ETFs are totally transparent when it comes to pricing and its transaction. Not uniform in nature. The price changes from Jeweller to Jeweller.
Brokerage charges (0.5%) and expense ratio (1%) are way much lower than gold making charges. Additional making charges (20-30%) is a considerable charges.
No safety concern issues as they are in digital form(Demat Account). Safety Concerns: There might be a chance of theft of physical gold.
Easy to sell off gold ETFs when required. Tough to liquidate the physical gold for cash in short time.

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Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator of future returns. ARN-104974