A Mutual Fund collects money from many people and invests it in a mix of stocks, bonds, or other assets. Managed by professionals, MUTUAL FUNDS offer an accessible way to grow your money without the need to pick individual investments yourself.
The concept of Mutual Funds in India began with the establishment of the Unit Trust of India (UTI) in 1963. Backed by the Government of India and the Reserve Bank of India (RBI), UTI was a government initiative aimed at promoting small-savings among Indians.
The mutual fund industry started opening up when public sector banks and Life Insurance Corporation (LIC) introduced mutual funds, marking the next stage of growth.
The liberalisation of the Indian economy in 1991 led to the entry of private sector funds in 1993, allowing private financial institutions and foreign firms to set up Mutual Funds in India. This increased competition and brought a wider variety of products.
The Securities and Exchange Board of India (SEBI) introduced regulations in 1996 to protect investors and enhance transparency. SEBI's guidelines covered fund management, disclosures, and investor rights, which helped build public trust.
With advancements in digital technology, investing in Mutual Funds became more accessible. Systematic Investment Plans (SIPs) gained popularity, allowing people to invest small amounts regularly. Today, Mutual Funds offer various schemes tailored to investors’ risk profiles and investment goals.
Mutual Funds: Pooled investments managed by professionals, offering diversification and tailored options like equity funds, debt funds, hybrid funds, etc.
Stocks: Buying shares in companies for potential growth. High-risk, high-reward.
Bonds: Loans to companies or governments that pay you back with interest. Lower risk, steady income.
Exchange-Traded Funds (ETFs): Similar to Mutual Funds but traded like stocks, providing liquidity and diversification with lower costs.
Real Estate: Investing in property for rental income or value appreciation; involves medium to high-risk with less liquidity.
Commodities: Investing in raw materials like gold, oil, or agricultural products as a hedge against inflation.
Cryptocurrencies: Digital assets like Bitcoin or Ethereum, offering high potential but high volatility and regulatory risk.
Certificates of Deposit (CDs): Bank deposits with fixed interest; low-risk, fixed-term instruments providing assured returns.
| Investment Type | Expected Returns (Per Annum) | Applicable Tax | Riskometer | Liquidity | Lock-in Period |
|---|---|---|---|---|---|
| Fixed Deposits (FD) | 4-7% | Taxed as per income slab | Low | High | 5 years for tax-saving FD |
| Public Provident Fund (PPF) | 7-8% (Govt-backed) | Tax-free (EET) | Low | Low | 15 years |
| Mutual Funds | 10-19% and more (Market-linked) | LTCG: 10% (after ₹1 lakh); STCG: 15% | High | Medium to High | No lock-in (except ELSS) |
| Real Estate | 8-12% (Appreciation) | LTCG: 20% (indexation) | Medium to High | Low | 3-5 years or more |
| Stocks (Direct Equity) | 12-18% and more (Market-linked) | LTCG: 10% (after ₹1 lakh); STCG: 15% | Very High | High | No lock-in |
| Gold (Physical/Digital) | 6-8% | LTCG: 20% (after 3 years) | Medium to High | Medium | No lock-in |
| National Pension System (NPS) | 8-10% | 60% of corpus tax-free at maturity | Moderate | Low | Until retirement |
| Government Bonds | 6-8% | Taxed as per income slab | Low | High | 5-10 years |
| Cryptocurrency | Highly variable | 30% on gains (in India) | Very High | High | No lock-in |
| Exchange Traded Funds (ETFs) | 8-12% | LTCG: 10% (after ₹1 lakh); STCG: 15% | High | High | No lock-in |