A mutual fund is a fund created by collecting investor money. Investors divide the revenue from these mutual funds as returns proportionately to each investor’s units. If you are thinking of investing in a mutual fund, these questions should help you.
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1. What is the minimum amount you can invest in mutual funds?
This is determined by the sort of fund in which you are investing. Usually, the minimum contribution is between Rs. 500 and Rs. 5,000, mutual fund companies now allow investors to start contributing with just Rs. 100 to draw in more customers.
2. Are there any tax benefits?
Under Section 80C, you may deduct up to Rs 1.5 lakh in taxes if you invest in any tax-saving plan. These mutual fund schemes are known as Equity-Linked Savings Programs or ELSS.
3. In which funds should beginners invest their money?
Novice investors should not start their investing journey with pure equity funds. However, individuals with taxable income should begin with ELSS funds, which often results in better performance. Other inexperienced investors can invest in either aggressive hybrids or balanced advantage funds.
4. What is an ETF?
An exchange-traded fund is an accumulated investment security that works like a mutual fund. When you purchase an ETF, you receive a collection of assets you can buy and sell during trading hours, potentially reducing your risk and exposure and assisting with portfolio diversification.
5. What is better: international FoF or international ETF?
A FOF is a good option for investors who prefer to put their investments on autopilot, whereas an ETF is better for active investors. However, ETF investors should also be aware of the frequently inefficient distinction between NAV and pricing.
6. Which ETF fund is best to invest in?
If you check the ICICIdirect website, you can find the top ETFs in India.
7. What is an NFO?
A new fund offeror NFOis the initial subscription offering for a new plan offered by asset management companies (AMCs). An NFO is put out on the market to get money from the public so that shares, government bonds, and other securities can be bought from the market.
8. Should investors go for an NFO or choose an existing fund?
It’d be rather best to select existing funds because this allows for the character of a fund to be determined from its past performance, which is not the case with an NFO.
9. What are debt mutual funds?
Debt mutual funds make money off the funds of their investors by investing in bonds or various kinds of deposits. The profits that debt funds produce for investors are primarily based on the interest they earn.
10. Which ELSS mutual fund is best to invest in?
One of the top ELSS mutual funds for tax benefits is Quant Mutual Fund’s Tax Plan Direct-Growth. It invests primarily in equity shares with growth potential to generate financial appreciation. The secondary goal is to give dividends and other forms of income.