By Ajmera x-change

 The domestic stock markets have witnessed a

fascinating joyride over the last few years.
 The benchmark NIFTY 50 hit an all time high near
11700 in August 2018. The index lingered around 6000
mark at the start of 2014. Such a massive jump in stock
prices has also led to a staggering increase in retail
investor participation though the mutual funds.
 Assets managed by the Indian mutual fund industry
have grown from Rs. 22.60 lakh crore in December
2017 to Rs. 24.09 lakh crore in December 2018. This
accounts for a 6.55% growth in assets over December
2017. Individual investors held Rs.12.91 lakh crore in
mutual funds as of December 2018, marking an
increase of 12.86% over December 2017.
 Range of options: There are a variety of mutual funds schemes available
to choose from. This allows investors to use mutual funds to meet a
variety of financial goals. If your risk appetite is strong, you can go for
equity funds with a focus on mid and small caps. If your risk appetite is
moderate, you can choose to invest in large cap funds and if your risk
appetite is very low and safety is of paramount interest, then it is
advisable to invest in debt funds. In fact, given the range of various funds
across these segments, you can build a steady corpus over the period of
time by investing in a number of funds matching your risk profile. In fact,
Systematic Investment Plan (SIP) come in very handy for retail investors
as it allows investors to make regular, equal payments into a mutual fund
for a period of time instead of one-time payment.
Diversification and consistency: A diversified portfolio of stocks and
consistent check on the investments are two of the biggest hallmarks
when it comes to equity mutual funds. A mutual fund is a fund of funds
i.e. your money is combined with the money from other investors, and
allows you to buy part of a pool of investments. A mutual fund holds a
variety of investments which can make it easier for investors to diversify
than through ownership of individual stocks or bonds.
 Safety and Quality: Unlike other quick-money schemes and chit funds,
mutual funds are regulated and supervised by agencies like the Securities
and Exchange Board of India (SEBI) and the Association of Mutual Funds
in India (AMFI). Such statutory overseeing ensures that while investors
are dealing with market risks in terms of volatility in share/bond prices,
the risk of losing capital due to a fraud are minimal.
Professional management: It is understandable that an individual
investor may not have the skills and knowledge to pick up well
performing stocks in a successful manner over the years. Mutual funds
allow you to pool your money with other investors and leave the specific
investment decisions to a portfolio manager. These managers are highly
qualified and credible when it comes to professional investing and decide
where to invest the money and when to buy and sell the holdings. Track
record and credentials of such managers are available to scrutiny and
investors can make up their decisions about investing in a fund based
upon such information.
 Ease of operations: It is very easy to invest in mutual funds. You can sell
your fund units or shares at almost any time if you need to get access to
your money given the online operations. However, there is a lock in for
some equity linked savings schemes. You can invest using a demat
account to simplify the process of transmission of units to nominee in
case of account holder’s demise and also avail a single statement to view
all holdings.
Tax Benefits: Investments in Equity Linked Saving Schemes or ELSSs
qualify for tax deduction under Section 80C of the Income Tax Act. The
maximum tax deduction allowed under Section 80C is Rs 1.5 lakh under
Section 80C. However, the last Union Budget introduced a tax on
dividend income by equity-oriented mutual funds at the rate of 10%.
Also, Long Term Capital Gains (LTCG) over Rs 100,000 per year on
Equity Mutual funds will now be taxed at 10%. This is pushing investors
to opt for the Growth option as compounding effect of having dividends
reinvested would allow for a sizable increase in your invested funds over
the long term.
Thank You!!!