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SchemesDisclaimer The calculator alone is not sufficient and shouldn't be used for the development or implementation of an investment strategy. This tool is created to explain basic financial / investment related concepts to investors. The tool is created for helping the investor take an informed investment decision and is not an investment process in itself. Bajaj Finserv AMC has tied up with AdvisorKhoj for integrating the calculator to the website. Mutual Fund does not provide guaranteed returns. Also, there is no assurance about the accuracy of the calculator. Past performance may or may not be sustained in future, and the same may not provide a basis for comparison with other investments. Investors are advised to seek professional advice from financial, tax and legal advisor before investing in mutual funds.
Why Choose Mutual Funds?
Invest across equities, debt, or a combination of both through professionally managed mutual fund schemes. Choose between SIP or lumpsum investment options based on your preference and investment approach. Mutual funds offer market-linked growth opportunities while helping spread risk through diversification. Investments can be monitored and managed easily, making them a convenient option for long-term financial planning.
What are mutual funds?
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Types of mutual funds to invest in based on asset class
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MORE ABOUT Mutual Funds
A mutual fund scheme is run by an asset management company or AMC. The structure of a mutual fund involves three key participants:
- Sponsor: Establishes the mutual fund and sets up the trust.
- Trustee: Oversees the mutual fund’s operations and ensures compliance with SEBI regulations in the interest of investors.
- Asset Management Company (AMC): Manages the fund’s investments and makes portfolio decisions.
The AMC may manage schemes across categories such as equity funds, debt funds, and hybrid funds. The fund manager invests according to the scheme’s stated investment objective and asset allocation pattern.
Money is pooled from multiple investors and invested in a diversified portfolio of securities such as equity shares, debt instruments, or money market instruments. Each investor is allotted units in proportion to the amount invested. The value of these units is represented by the Net Asset Value (NAV), which is calculated daily based on the market value of the underlying portfolio.
Returns are market linked and depend on the performance of underlying securities. Mutual funds are regulated by SEBI in India, and all investments are subject to market risks. Investors may evaluate risk appetite, time horizon, and financial goals before investing.[
Types of mutual funds can be broadly classified based on the asset classes they invest in. There are three types of mutual funds under this classification– equity, debt and hybrid funds. Let’s take a closer look at each to understand the differences better.
- Equity Mutual Funds: An equity mutual fund primarily invests in shares of companies listed on the stock market. Equity mutual funds aim for long-term gains and are suitable for investors with a higher-risk appetite. Some of the funds under this category are Large Cap, Large and Mid Cap, Mid Cap, Small Cap and sectoral funds.
- Debt Mutual Funds: A debt mutual fund invests primarily in fixed-income instruments like government securities, sectoral bonds, treasury bills and money market instruments. Debt mutual funds are comparatively lower-risk and are considered suitable for conservative investors seeking the potential for relatively stable returns over a shorter period.
- Hybrid Mutual Funds: As the name suggests, a hybrid mutual fund invests across equity and debt mutual funds. In doing so, hybrid mutual funds aim to combine the long-term growth potential of equity funds with the relative stability of debt mutual funds. These are suitable for investors who seek a balanced approach to mutual fund investing with lower risk than pure equity funds and higher potential returns than debt funds.
Investing in mutual funds is easy, convenient, and affordable. Here are some key advantages:
Diversification: Mutual funds investments are spread across a wide variety of assets, reducing the risk associated with any single investment.
Professional management: Experienced fund managers make investment decisions, aiming to achieve the fund’s objectives.
Liquidity: In open ended schemes, investors can easily buy or sell mutual fund units at the current NAV. Experienced fund managers make investment decisions, aiming to achieve the fund’s objectives.
Accessibility: Mutual funds provide access to a broad range of investments, even for those with limited capital.
Convenience: Investing in mutual funds is straightforward, with minimal administrative tasks for individual investors.
There are two common routes for mutual funds investments: Systematic Investment Plan or SIP and lumpsum.
Lumpsum: This mode involves investing a sizeable amount in one go into the scheme of your choice. It is a one-time investment.
SIP: This involves investing a fixed amount in regular instalments – weekly, monthly, quarterly, etc. It encourages investing discipline. It is also affordable, as SIP options start from Rs 100 or Rs 500 in several schemes.
To invest in a mutual fund offered by Bajaj Finserv AMC, follow these steps:
- Visit Bajaj Finserv AMC’s official website. Click on ‘Invest Now’ on the scheme page or the website home page. You will be redirected to the investor portal.
- If you are an existing investor with Bajaj Finserv AMC, you can log in. New investors can sign up. To sign up, you will be asked to enter some basic information such as your name, date of birth, PAN details and bank account information. You may also be asked to complete your Know Your Customer (KYC) verification process if you are not KYC validated.
- From the dropdown menu, select the scheme you wish to invest in and the mode of investment (lumpsum or SIP). Enter the investment amount and select the payment method.
You can also invest online as well as offline through financial advisors, distributors and on aggregator platforms. You can choose from among debt, equity and hybrid mutual funds and exchange traded funds (ETFs).[
Here are some of the fees involved in mutual fund investing:
Expense Ratio: The expense ratio is the primary cost involved in mutual fund investing. Expressed as a percentage of the fund’s assets under management (AUM), it is deducted daily from the fund’s Net Asset Value (NAV). This fee covers fund management charges, administrative expenses, and operational costs, among others. A higher expense ratio reduces the net returns delivered to investors.
Exit Load: An exit load is a fee charged by some funds when you redeem your investment before a specific time frame. This is set in place to discourage early withdrawals and help fund houses manage liquidity.
Transaction Fees: Some distributors may opt to charge a small transaction fee for investments (SIP or lumpsum) that exceed Rs. 10,000. The amount is deducted by the fund house on behalf of the distributor.
No matter what your choice of fund, it is essential to review the costs involved before investing. Considering these costs can help visualize how your returns could be impacted in the long run. All charges are disclosed in a fund’s Scheme Information Document.
If you’re not sure of where to invest and what amount to start with, there are several convenient and easy-to-use tools that can simplify the planning process. For example, Bajaj Finserv AMC has free online SIP Calculator, Step up SIP calculator, Lumpsum Calculator tools that can simplify the planning process. Depending on your mode of investment (lumpsum or SIP), you can choose the tool that is suitable.
All you need to do is enter your investment amount, duration, and expected rate of return. The calculator instantly shows you the potential total corpus. You can determine the expected rate of return based on the historical performance of the mutual fund scheme or category you are looking to invest in. Do note, however, that past performance may or may not be sustained in the future.
You can also use the calculators to determine what scheme to invest in, or what instalment or investment amount to choose, based on what you want your final corpus to potentially be.
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FAQ
While mutual funds offer diversification, reducing risk, they are not risk-free. The value of your investment can fluctuate based on market conditions. It's essential to choose funds that match your risk tolerance and investment goals. Diversifying across different types of mutual funds can further mitigate risks.
SIP stands for Systematic Invest Plan and is a method of investing in mutual funds. SIPs allow you to invest a fixed amount at regular intervals – daily, weekly, monthly, quarterly etc. – in a mutual fund scheme. SIPs can start at Rs 100 or Rs 500 and enable affordable and disciplined investing.
Yes, earnings from mutual fund investments – capital gains as well as IDCW income– are taxable. The tax amount depends on the type of scheme.
Before investing in a mutual fund scheme, you should consider the scheme’s investment strategy and the track record or experience of the fund manager. Also ensure the scheme’s risk level aligns with your risk appetite and investment objectives.
Yes, mutual funds in India are regulated by the Securities and Exchange Board of India or SEBI.
Choosing a suitable mutual fund involves evaluating your financial goals, risk tolerance, and investment horizon.
Mutual fund investments have the potential to help build wealth over time. Investments in equities, in particular, can offer inflation-beating returns in the long term. Debt mutual funds, too, can offer higher return potential than some traditional avenues.
However, it is essential to note that mutual fund returns depend upon market conditions and hence come with risk. In some situations, returns can be below expected lines and can even turn negative in some market conditions. Equity oriented funds, in particular, tend to carry high risk and it is advisable to have a longer investment horizon to potentially tide over market volatility.
The level of liquidity depends on the type of scheme. Most open-ended schemes allow you to buy or sell units at any time, though there may be a small exit load on withdrawals made before a certain period (such as one year). Some funds have a lock-in period. For example, Equity Linked Savings Schemes or ELSS funds have a lock-in period of three years, during which you cannot withdraw your investments. Meanwhile, closed-ended funds do not offer high liquidity. You can only buy units during the new fund offer period and redeem them at maturity. If you need to buy or sell units before maturity, you can only do so on the stock exchange.
Cut-off times depend on the type of fund and transaction (purchase or redemption). As a general guideline. NAV allocation depends on when the transaction and fund realisation are completed. Investors are encouraged to confirm the cut-off with their platform or distributor.
While some mutual funds investments allow you to invest in as SIP at Rs. 100, this might not be the case for all. The minimum investment amount can vary scheme to scheme. Hence, it is advisable to review the fund’s documents.
Several mutual fund investments in India accept monthly SIPs of Rs. 500, making them accessible for a wide range of investors. However, fund-specific terms may differ.
Yes, Rs. 1000 can be a suitable starting point for your mutual fund investment journey. However, it is essential to review the fund’s minimum investment amount and suitability for your financial goals before proceeding.
If you start a Systematic Investment Plan of Rs. 30,0000 per month for a period of 5 years, the final value will depend on the performance of the chosen fund and the market conditions. To get a clear understanding of your investment’s future, you can use an SIP calculator to estimate the potential returns on your investment (though there is no assurance that actual returns will be along expected lines).
Capital gains or profits made from the sale of mutual fund units are taxed. The tax rate depends upon the type of fund, holding period and the redemption amount.
For equity-oriented funds, units redeemed after a holding period of a year or more qualify for long-term capital gains tax. The tax rate is 12.5%. However, gains of up to Rs. 1.25 lakh are tax-exempt. Units held for less than a year qualify for short-term capital gains tax. The rate is 20% and there is no exemption.
For debt-oriented funds, the capital gains are taxed as per the investor’s income tax slab, regardless of the holding period.
Mutual funds investments offer potential returns through the rise in the market value of the assets over time (that is, capital appreciation). Investors receive these potential gains at the time of redemption. Many funds also have an IDCW (Income Distribution cum Capital Withdrawal) plan where income may be released from time to time to investors who have opted for this plan
However, returns are not guaranteed and depend on multiple factors like market movements, asset allocation, and the fund's performance over time.
The expense ratio represents the annual costs incurred when managing a fund. This is deducted from the fund’s assets. On the other hand, exit load is a fee that is charged by some funds when units are redeemed within a certain period. These charges vary across schemes and are detailed in the fund’s documents.
While there are many different mutual fund in India, the choice depends on your investment horizon, risk appetite and timeline. You may browse online mutual fund purchase options on registered platforms to compare categories, review fund details, and make an informed decision.
The benefit of mutual fund in India includes diversification, professional management, and the potential to grow wealth over time.