Mutual Funds - My Blog

💡 What Is a Mutual Fund?

A mutual fund is an investment vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other assets. It is managed by professional fund managers and is suitable for both new and experienced investors.

Mutual funds offer:

✅ Easy diversification
✅ Professional management
✅ Affordable entry points

📌 Key Facts Before Investing in Mutual Funds

1. Mutual Funds Are Not Just Equity-Based

Mutual funds invest in:

Equity instruments (shares, stocks)
Debt instruments like:
- Certificates of Deposit (CDs)
- Bonds
- Government Securities (G-Sec)
- Non-Convertible Debentures (NCDs)

👉 Debt mutual funds can be low-risk and tax-efficient, especially for short durations.

Tip: Choose between equity, debt, hybrid, or multi-asset mutual funds depending on your investment goals and time horizon.

2. Easy to Start

Starting your mutual fund investment is simple:

✔️ Be KYC compliant
✔️ Have an active bank account

With platforms like FundzBazar, you can:

Invest 100% online
No Demat account needed!

3. Flexible Investment Options

a) SIP – Systematic Investment Plan

Invest a fixed amount at regular intervals (e.g., monthly).
Benefits:

Rupee cost averaging
Builds investment habit
Great for long-term wealth creation

b) SWP – Systematic Withdrawal Plan

Need regular income?
Set a fixed withdrawal amount over a period of time.

c) STP – Systematic Transfer Plan

Worried about market volatility?

First invest a lump sum in a liquid fund
Gradually transfer to equity fund
Reduces risk during market ups and downs

4. 🧾 How Are Mutual Funds Taxed?

Scheme Type	Holding Period	Tax Rate	Notes
Equity Fund (≥ 65% equity)	< 1 year	15%	Short-term Capital Gains (STCG)
	> 1 year	10% on gains > ₹1 lakh	Long-term Capital Gains (LTCG)
Debt Fund (< 65% equity)	< 3 years	As per tax slab	Short-term
	> 3 years	20% with indexation	Long-term

Indexation adjusts your cost of investment for inflation, reducing tax liability.