What are the kinds of financial goals I can fulfill with Mutual Funds?

What are the kinds of financial goals I can fulfill with Mutual Funds?
The best part about Mutual Funds is that no matter what your financial goal is, you can find an appropriate scheme for it.

So if you have a long term financial goal like planning for your retirement or your child’s future education than equity funds could be a choice to consider

If your endeavour is to potentially generate regular income, a fixed income fund could be considered.

You may have suddenly received a windfall of money and are yet to decide where you wish to invest, you can consider a liquid fund. A liquid fund is a good substitute to consider for a savings account or even a current account to park your working capital.

Mutual funds also offer investment options for saving tax. Equity Linked saving Schemes (ELSS) are specifically designed to do the same

Mutual Funds are a one-stop shop for practically all investment needs.

Long term. Short term. Your choice... 

Are Mutual Funds ideal for short term or long term?

“Mutual Funds could be a good saving tool for short term.”

“You must be patient with your Mutual Fund investments. It takes time to deliver results.”

People regularly come across both the above statements, which are clearly contradictory.

So what period are Mutual Funds suitable for? Short term or long term?

Well, that depends on what one’s investment goals are, and most goals are driven by time. There are schemes suitable for short periods, there are several schemes suitable for longer horizon, and then, there are schemes for any period in-between.

Consult your Mutual Fund distributor or your investment advisor, discuss your financial goals, and then decide where you want to invest. For example;

1. Equity-oriented Mutual Funds- Look for longer periods, typically 5 years and above.

2. Fixed Income oriented Mutual Funds-

1. Liquid Funds - For very short term – Less than 1 year

2. Short Term Bond Funds – For the medium term – 1 to 3 years.

3. Long Term Bond Funds - For the long term – 3 years or more

As you explore our website, you will know more about the various kinds of Mutual Funds too. So, trust the expertise of your advisor, know your goals, and invest!

Won’t I need a large amount to invest in Mutual Funds?

Won’t I need a large amount to invest in Mutual Funds?

People think that Mutual Funds are elite investments made only for the wealthy. The fact is: one does not need large sum to invest in Mutual Funds, you can start with a sum as low as ₹ 500, or 5000 depending on the kind of fund you choose.

Why keep the minimum amounts as low as these?

The economies of scale can be understood easily if we look at travelling by an airplane. The plane would cost a lot of money and, of course, not everybody owns a plane! However, we can afford air travel simply because all the costs are divided among all the passengers using the services at various different points of time.

Similarly, a person may not have enough money to create a diversified portfolio through investment in a very large number of investment avenues, one may not have enough money required to conduct or purchase research on investments. However, the economies of scale allow small investors to get multiple benefits through Mutual Funds.


Mutual Funds are thus ideal vehicles for small investors for saving and investing.

So can I invest now, for my vacation 8 months later?

So can I invest now, for my vacation 8 months later?

Articles about Mutual Funds are usually written for planning to achieve certain long term specific goals, and investors assume that other goals, especially short term cannot be achieved.

Let us break this myth with an example.

Ramesh, a travel junkie got to satisfy his wanderlust, when the company he worked for achieved success and rewarded its employees with bonuses.

With his bonus Ramesh decided to go on a Europe trip, but his work on a big and prestigious project was incomplete and approaching its deadline. The project would end in the next eight months.

The exact date of Ramesh’s trip is yet to be finalized. Looking at his expenses- some money needs to be spent before and some during the trip. Uncertainty regarding the exact dates on which how much money is to be paid is there.

Certain Mutual Fund schemes are ideal for such cases.

Ideally Ramesh should park these savings into a liquid fund to take them out on any working day. Money will be in his account the day after he submits a request for withdrawal. Ramesh can even request for withdrawal through an SMS or App.

Planning for even short term goals becomes convenient with this.

How often can I remove my money?

How often can I remove my money?
An investor has no restriction on redeeming money from an open ended scheme. While there may be an exit load in certain cases, which impacts final amount realised, all open end schemes offer liquidity as a great benefit.

The decision to redeem is totally at investor’s discretion. There are no restrictions on the number of redemptions, or on the amount to be redeemed. There have to be sufficient units in the account to fund redemptions. Scheme documents usually indicate minimum amount that can be redeemed.

Units under lien to a bank or institution cannot be redeemed, unless the lien is removed. Redemptions may be restricted only under extraordinary circumstances, as decided by the Board of Trustees.

Closed end schemes may be redeemed from the AMC only on maturity. However, they do provide a route to liquidity – any time before maturity - by selling units in a recognised exchange.

Redemptions can be made at;

· Investor Service Centres (ISCs)

· AMC offices

· Official Points of Acceptance of Transaction (OPAT)

· Through an authorised on-line platform.

How soon can I withdraw my money from Mutual Funds?

How soon can I withdraw my money from Mutual Funds?
Mutual Funds are one of the most liquid assets, i.e. it is one of the easiest to convert into cash. In order to redeem funds through offline mode, the unit holder needs to submit a signed Redemption Request form to the AMC's or the Registrar’s designated office. The form requires details like unit holder’s name, folio number, scheme name, and number of units to redeem. The proceeds from the redemption will be credited to the registered bank account of the first named unit holder.
Mutual Funds can also be purchased and redeemed on the concerned fund’s website. You simply have to log-on to the ‘Online Transaction’ page of the desired Mutual Fund and log-in using your Folio Number and/or the PAN, select the Scheme and the number of units (or the amount) you wish to redeem and confirm your transaction.
In addition, registrars like CAMS (Computer Age Management Services Pvt. Ltd.), Karvy, etc. offer the option of redeeming Mutual Fund bought from several AMCs. You can download the form online or visit the nearest office. Please note that these agencies might not service all the AMCs.

How do I withdraw my money from Mutual Funds?

How do I withdraw my money from Mutual Funds?
One of the biggest advantages of Mutual Funds is liquidity – the ease of converting an investor’s units into cash.Mutual Funds, being regulated by Securities and Exchange Board of India (SEBI), have well laid out norms to ensure liquidity. Open end schemes, which comprise of a large majority of schemes, offer liquidity as a major feature. Liquidity is ease of access or conversion of an asset into cash. Once the redemption is complete, funds are transferred to the designated bank account of the investor, within 3 business days after the redemption was lodged.
However two issues need to be kept in mind. One, there may be an exit load period in certain schemes. In such cases, redemptions before a certain specified period, say 3 months, may attract a nominal load like 0.5% of Asset Value. Fund Managers impose such loads to deter short term investors. Secondly, AMCs may indicate what the minimum amount for redemption is. Investors are advised to read all scheme related documents carefully before investing.

When can I withdraw my investment?

When can I withdraw my investment?

An investment in an open end scheme can be redeemed at any time. Unless it is an investment in an Equity Linked Savings Scheme (ELSS), wherein there is a lock-in of 3 years from date of investment, there are no restrictions on investment redemption.

Investors need to keep in mind any applicable exit load on their investment. Exit loads are charges deducted at the time of redemption, only if applicable. AMCs usually impose an exit load to deter short term or speculative investors from entering a scheme.

Closed end schemes do not offer this, as all units are automatically redeemed on the date of maturity. However, units of closed end schemes are listed at a recognised stock exchange, and investors can sell their units to others only through the exchange.

Mutual funds are one of the most liquid investment avenues in India, and are an ideal asset class for every financial plan.

How can one track a Mutual Fund performance?

How can one track a Mutual Fund performance?

In this digital and information age, it has become relatively easy to keep track of investment and portfolio performance. While advisors are irreplaceable partners in your financial journey, it is best for investors to have a little knowledge about their own investments. Don’t worry, you don’t have to sit with mind-boggling spread-sheets and graphs.

Anyone who has invested through an advisor or intermediary usually gets updates and review statements that track portfolio and scheme performance. Even in the absence of such statements, there are several websites and mobile apps that keep track of scheme performance. Some such sites can be customised to track a particular portfolio. Popular business papers also regularly review and comment on Mutual Funds.

Additionally, you can track your investments using Fund Fact Sheet. It is a basic one-page document that gives an overview of a Mutual Fund scheme with special emphasis on disclosure of scheme performance and portfolio and is published every month by each Mutual Fund. It is like a report card that indicates the health of the scheme.
The infographic on the left shows you what a Fact Sheet contains.

Can Mutual Funds help create wealth?

Business and commerce allows us to create wealth by investing our money with those who are on the path to creating wealth. We can be investors in businesses of entrepreneurs, by investing in stocks of various companies. As the entrepreneurs and the managers run their businesses efficiently and profitably, the shareholders get the benefits. In this regard, Mutual Funds are a great way to build wealth.

But how do we know which stocks to buy, and when?

That is where taking professional help counts. They also take the advantage of a large corpus to explore more opportunities simultaneously. Like a balanced diet – we all need proteins, vitamins, carbohydrates, etc. Eating only one type results in some nutrient deficiency. Similarly, in a diversified equity fund you’re exposed to different segments of the economy, and also protected from the potential downside.

Invest in a professionally managed, diversified equity fund and stay invested for long period to create wealth for yourself and your next generation.