Understanding Tax Mutual Funds Investments-7470d

Stocks-Mutual-Funds Mutual Fund is basically a trust which through its various schemes safeguards the investments of small and big investors. Every scheme of each of these mutual funds has different terms and conditions. By nature mutual funds are not tax saving instruments. However, investment products in these funds may offer tax savings. ELSS schemes which are commonly known as tax mutual fund is a category where equity and equity related instruments are invested. Investment up to 1 lakh is tax exempted under section 80C. However, these schemes have a lock in period of 3 years before which you cannot withdraw. The dividends received by the investor are also tax free. ELSS is a very good tax saving instrument which ensures good returns. However, you need to invest carefully after devoting sufficient time to select the right fund. There are different types of ELSS schemes which are categorized as growth and dividend options. In the Growth option of ELSS scheme, the investor does not get money during the investment tenure. He gets the entire lump sum amount at the time of maturity. On the contrary dividend option of tax mutual fund has two choices and they are The investor can either cash on the dividends The Investor can opt for dividend re-investment option. The choice of growth or dividend options solely depends upon your priorities. Just by going through the track records does not mean that you have got the best mutual funds. Mutual Funds in India have some quantitative measures that you should consider to evaluate the best option for you. These are Expense Ratio This ratio points to the expenses of funds annually, including the administrative and management cost. Sharpe Ratio This ratio works as an indicator that your returns are either due to smart investing decisions or due to excess risk. Remember, higher Sharpe Ratio is always better. Alpha Ratio It is an indicator of risk relative to the benchmark Index. If the alpha is more then it is always better for an investor. R-squared It is method to measure the percentage of an investments movement. Today mutual fund online have created great opportunities to manage your account easily. You can sell and redeem units online without any hassle. Having an access to your account 24/7, no manual filling of application form and keeping a track of investments 24/7 are few of the benefits of choosing online investments. Most of the banks and institutions have mutual fund online options with easy accessibility. You can apply for an E-PIN number to manage and access your account comfortably. However, it is important to consider your risk taking aptitude before you select a mutual fund. Mutual funds in India are gaining grounds. It has become one of the most popular choices for investing money. The flexibility, diversification, professional management, less risk, easy to redeem are all few of the benefits of mutual funds. You will need to understand yourself as an investor first and then opt for mutual fund schemes. Market being volatile, you will need to analyze your behavior in handling risk. About the Author: 相关的主题文章: