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Updated on : 6 May, 2018

Mutual Funds and Tax Benefits

Content :

Investing in Mutual Funds

The choice of a mutual fund depends upon the financial objective/goal, availability of investible funds and risk taking capacity of the investor.

Financial objective/goal:

Availability of Funds:

Whether the funds are available for lump sum investment or for regular investment of small amounts by monthly intervals or otherwise. In the later case, a mutual fund having Systematic Investment Plan (SIP) provision will be required.

Risk Taking Capacity :

After deciding upon the type of fund for investment, an investor has to select the mutual fund scheme for investing his savings. For selecting the right scheme for investment, following can be helpful :

Advantages of Mutual Funds

Disadvantages of Mutual Funds:

Glossary of Common Terms

Asset Management Company (AMC): An Asset Management Company (AMC) is an organization that pools money from people and invests to achieve certain objective. An AMC may manage several funds of different types.

Capital Market Risk: It is the risk arising due to changes in the stock market.

Expense Ratio : It is the ratio of total expenses of the fund to the total funds under management.

Entry / Exit Load: A charge to be paid by an investor at the time of buying / selling of units of a fund.

Liquidity: It is the degree of ease with which an investment can be redeemed.

Net Asset Value (NAV): Net Asset Value (NAV) is the prevailing market value of one unit of a mutual fund.

Disclaimer

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