Individuals are always on the lookout for avenues to invest their hard-earned money. Taxes, increasing interest rates on loans, and inflation cause a reduction in the amount of money a person saves over the years. With savings bank interest rates falling as low as 3.5% to 4.5%, there’s not even beating inflation, forget about growing your corpus.
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How much do you lose in your savings account?
A sum of Rs. 10,000 when invested at 4.5% per annum fetches an interest of just Rs. 450. This amount after tax deduction (assuming 20%), reduces to a mere Rs. 360. Now considering the inflation at 5% per annum, the value of your investment goes on decreasing. Therefore, you aren’t saving much overall and rather making a loss, if you are purely dependent on your savings account.
In such a scenario, you can consider mutual fund investments as one of the most sorted option. Mutual funds usually reap higher returns than any other traditional investment instruments, given to its potential of investing in both equity as well as debt.
Mutual funds also provide you unmatched convenience and flexibility to invest in diversified portfolios. The investment can range from as low as Rs. 500 in order to enable easier entry, thus offering you the freedom of choosing your customised investment plan.
Mutual Funds Basics
Mutual Funds are a form of investment where
- Your hard-earned money is managed by highly-qualified professional fund managers.
- They invest in pre-disclosed sectors/themes which they believe has the potential to outperform the broader market.
Types of Mutual Funds
You can choose from wide variety of mutual fund options available in the market, depending on the way you want the money to be allocated. Based on your financial goals. Let’s understand some scenarios.
Broadly, there are debt and equity MFs. Debt funds invest in debt papers of corporates and/or government, and equity MFs invest in a company’s equity.
Within equity, funds could be based on market cap, sector, theme etc. Cap refers to market capitalisation i.e. the amount of money a listed company is worth.
- Large cap means very-large businesses. These stocks are stable, relatively risk-free and have handsome growth.
- Mid cap and Small cap are moderate and small businesses respectively. They may offer higher returns on investment but may also have a higher risk.
What to look for, and how to invest?
Money linked to stocks may fluctuate with the market. You should invest through a reputed platform that:
- Analyses your financial goals
- Provides customised recommendations based on your risk-profile
- Has a history of delivering consistent returns
- Can advise you when to withdraw your money
Intelligent MF Investment with ICICI Direct One Click
India’s leading investments and trading platform ICICIdirect has come up with innovative tailor-made investment solution. This exciting investment product is known as One Click. It is an easy to use interface that guides you to choose the basket you want to invest in from ‘Trade and Invest’ page of ICICIdirect. The baskets under One Click also notifies customers in case of a change at scheme from BUY to SELL as they are being monitored regularly.
Here are some benefits you get while investing through One Click.
- One Click allows you to invest through various investment options where you can determine best suitable portfolio according to your investment goals
- It allows you to track the performance of your portfolio
- Research-backed MF schemes
- Investors can view future value of SIP’s before making investment decisions, so that they can change the investment amount accordingly
- Investor has options to select from 100% equity to 100% debt baskets
- No mutual fund transaction charges applicable
- One Click allows individual to personalise each goal and map against each basket
How to Invest?
ICICIdirect’s One Click investment platform (www.icicidirect.com) has an easy registration process as it offers you the flexibility to choose the basket you want to invest in. You can invest as a lump sum or start a SIP – Systematic Investment Plan. Every month, an amount of your choice (over minimum requirement) is deducted from your account and MFs are purchased.