Your financial needs escalate as you get older, and you suddenly discover that a fixed monthly salary won’t be enough to cover everything.
You will require a smart investment strategy that provides enough funds when needed and even performs your duties while you are away.
Mutual funds are among the best investment possibilities, which you can choose based on your time horizon and risk appetite.
But how are you able to do this? Let’s check it out.
What are Mutual Funds?
A financial tool called mutual funds collects money from several investors. After that, the combined funds are invested in assets such as listed company stocks, corporate bonds, government bonds, and marketable securities.
As a shareholder, you are not the actual owner of the company equities that mutual funds buy. However, you equally split any gains or losses with the other pool investors. This is how a mutual fund and the word “mutual” are related.
You benefit from the fund manager’s experience and the Securities Exchange and Board of India’s (SEBI) regulatory safety. The expert fund manager makes sure investors receive the highest possible return.
Ways to Invest in Mutual Fund for Salaried Individuals
Nowadays, investing in mutual funds is very easy thanks to technology; based on your best available resources, you can invest in many ways:
You can drop off the properly filled form at the office of the relevant mutual fund provider. You could also print the application and meticulously fill it out. However, before delivering the check, you should thoroughly read the agreement.
Investment in Mutual Fund via Online Mode
You only need an internet connection and a mobile device to invest online. Numerous options help you select the best mutual fund depending on your risk tolerance, objectives, and other considerations.
You can save time and energy by using one of the various online investment platforms that are accessible. You only need your PAN card information, identity information, and an active bank account to link with the mutual fund firm.
Through Demat Account
You can invest in and transact with the mutual fund using your current bank account and Demat account. Your stockbroker must be a licensed distributor of mutual funds to supply the service.
To invest, you must sign in to your Demat account and search for the mutual fund investment option. The investment must be completed by making an online money transfer.
We recommend starting with Zerodha.
Investing through agents is a long, tedious, and costly strategy that should be ignored. To assist you in making your decision and completing the required form, call an agent. Agents may also demand a commission for their services.
They now have digital gadgets that they may use to help you fill out forms electronically and promptly activate your account. However, you must make sure the agent is genuine.
Benefits of Investing in Mutual Funds
To accommodate the goals of all kinds of investors, more than 8000 mutual funds are available in various categories. Mutual funds are appropriate for everyone when they offer a fine blend of gain, earnings, and security.
The benefits of investing in mutual funds are as follows:
Best Money Management
A group of professionals manages the money you’ve pooled. You can therefore benefit from professional advice when building wealth. When choosing stocks, industries, distribution, and buy and sell orders, the fund manager does extensive research.
Mutual funds are undoubtedly a very economical investment tool when considering the advantages of knowledge, diversity, and other return alternatives. However, the expense ratio is subject to a 2.5% regulatory cap.
The flexibility of a systematic investment plan allows you to make investments at predetermined intervals, such as weekly, quarterly, or monthly. With just Rs. 500, you can begin investing in mutual funds.
Facility to switch funds
Some mutual funds do allow you to transfer funds if you are dissatisfied with the performance of a specific mutual fund scheme. However, you must tread very carefully when choosing to move.
You can save money on taxes and build wealth by investing in an ELSS tax-saving mutual fund. Moreover, you may also claim a deduction up to Rs. 1,50,000 per year under Section 80C of the Income Tax Act.
Best Mutual Funds for Salaried Individuals
Now that we have learned about mutual funds, we can safely discuss the best mutual funds for salaried individuals so that we can get maximum earnings with minimum risk:
HDFC Arbitrage Fund
The HDFC Arbitrage Fund focuses on the arbitrage opportunities emerging from cash and financial derivatives.
One of India’s biggest mutual fund houses, HDFC Asset Management Company, founded in September 2007, offers it. This mutual fund falls under the category of arbitrage and is open-ended.
The hybrid HDFC Arbitrage Fund has a preference for mid-cap companies. The portfolio is composed primarily of debt and money market securities, with equity and equity-related products making up about 2/3 of the total. You can apply for the HDFC Arbitrage fund online and offline.
For the most part, the fund has outperformed the benchmark returns and is a solid choice for long-term investors wishing to plan their retirement, purchase a home, get married, or have children.
However, before investing in risky assets like mutual funds, you should always speak with your financial advisor.
ICICI Prudential Regular Savings Fund Direct-Growth
ICICI Prudential Mutual Fund’s Conservative Hybrid mutual fund program is called ICICI Prudential Regular Savings Fund Direct-Growth. This fund was established on January 1, 2013, and has been operating for ten years and nine months.
ICICI Prudential Regular Savings Fund Direct-Growth is a medium-sized plan in its area with assets under management (AUM) of Rs.3,267 Crores as of June 30, 2022. The fund’s expense ratio, which is 0.99%, is greater than what the majority of comparable Conservative Hybrid funds charge. Currently, the fund is allocated 19.16% to equities and 64.97% to debt.
The 1-year returns for the ICICI Prudential Regular Savings Fund Direct-Growth are 7.03%. Moreover, it has generated returns of 10.72% annually since the start. Every seven years, the fund has doubled the amount invested in it.
The ability of the ICICI Prudential Regular Savings Fund Direct-Growth scheme to generate returns continuously is comparable to that of the majority of funds in its class. It performs better than average at limiting losses in a down market.
Investments in the Financial, Communication, Insurance, Energy, and Healthcare sectors make up most of the fund’s equity holdings. Comparatively to other funds in the category, it has taken less risk in the financial and communication industries.
At last, the fund’s debt has a low credit rating, indicating that the borrowers it has lent money to are not of very high calibre.
Invesco India Tax Plan Direct-Growth
An ELSS mutual fund program from Invesco Mutual Fund is called Invesco India Tax Plan Direct-Growth. This fund was established on January 1, 2013, and has been operating for nine years and seven months.
As of June 30, 2022, this mutual fund managed 1,818 Crores in assets, making it a medium-sized vehicle in its class. The fund’s expense ratio of 0.85% is lower than that of most other ELSS products.
The 1-year returns for Invesco India Tax Plan Direct-Growth are 30%. It has generated 17.02% average annual returns since its start. Every three years, the fund has doubled the amount invested in it.
SBI Blue-chip Direct Plan-Growth
SBI Mutual Fund’s SBI Blue-chip Direct Plan-Growth is a Large Cap mutual fund product. This fund was established on January 1, 2013, and has been operating for more than nine years now.
It is a medium-sized fund in its category with assets under management (AUM) of 32,773 Crores as of June 30, 2022. The fund has a higher expense ratio than most other large-cap funds, at 0.95%.
Last year’s SBI Blue-chip Direct Plan-Growth returns were 5.91%. It has produced returns of 15.55% on average per year since its debut. Every three years, the fund has doubled the amount invested in it.
UTI Short-Term Income Direct-Growth
A Short Duration mutual fund product from UTI Mutual Fund is UTI Short-term Income Direct-Growth. It is a medium-sized fund in its category with Rs. 2,315 Crores in assets under management (AUM) as of June 30, 2022.
The fund’s expense ratio is 0.34%, which is comparable to what most other short-term funds charge.
The 1-year returns on UTI Short-term Income Direct-Growth are 8.36%. It has produced returns of 7.34% annually on average since its debut.
This scheme has a consistent return comparable to most funds in its class. It has a strong capacity to minimize losses in a declining market.
Axis Blue-Chip Fund
The Axis Mutual Fund House owns the open-ended large cap equity Axis Bluechip Fund. The fund officially opened on January 5, 2010.
The fund’s stated investment goal is to “create long-term capital growth through investments in a diversified portfolio that are primarily made up of equities and equity-related instruments of large-cap corporations.
As of July 31, 2022, the Axis Bluechip Fund had assets under management totaling Rs, 35915.36 crore. As of June 30, 2022, the expense ratio for the fund’s Regular plan is 1.69%.
Parag Parikh Flexi Cap Fund Direct-Growth
An Open-ended Flexi Cap Equity scheme that is a part of PPFAS Mutual Fund House is the Parag Parikh Flexi Cap Fund – Direct Plan. It was launched on May 28, 2013.
The fund’s investment goal states: “By investing predominantly in equities and equity-related securities, the scheme seeks to generate long-term capital appreciation. It is compared to the NIFTY 500 Total Return Index as a benchmark.
As of September 1, 2022, the Parag Parikh Flexi Cap Fund’s Direct Plan’s Current Net Asset Value for the Growth option is Rs 51.13. As of July 31, 2022, it has assets under management of Rs 24594.84 crore.
Kotak Emerging Equity Fund Regular-Growth
A Kotak Mahindra Mutual Fund House open-ended mid-cap equity program is the Kotak Emerging Equity Fund Regular Plan. The fund began operations on March 30, 2007.
According to the fund’s investment goal, which is measured against the NIFTY Midcap 150 Total Return Index, the scheme intends to provide long-term capital appreciation through a portfolio of equities and equity-related instruments by investing primarily in mid-sized companies.
As of September 1, 2022, the Kotak Emerging Equity Fund Regular Plan’s Current Net Asset Value for the Growth option is Rs 77.00. As of July 31, 2022, the Kotak Emerging Equity Fund Regular Plan had assets under management totaling Rs. 20619.12 crores.
A mutual fund is a formidable investment choice that could help salaried individuals to build wealth over the long run. Mutual funds offer plans for every aspect of life, from retirement to accumulating wealth.
You offer investments for conservative and risk-averse investors.
The benefit of diversity, low cost, freedom to invest in lesser quantities, and expert fund management are all advantages.
However, Mutual funds are subject to market risks and read all scheme-related documents carefully.