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FAQs on Mutual funds

Depending upon the risk level associated, there are three types of mutual fund available in the market:

  • High risk
  • Medium risk
  • Low risk

There’s no age limit when it comes to investing. The time when you start earning and saving you can start investing in mutual funds. There are many mutual funds scheme with different objectives. Whatever your age or goal is, you can start to invest in MF anytime.

To earn regular returns from the mutual fund during retirement by investing in the long-term fund, pension funds are the right option for you. Before investing in MF, you must consult a financial advisor.

Mutual fund investment is considered a safe investment if you understand it well. While investing in equity mutual funds, investors should not be worried about the minor ups and downs in returns. You must choose the appropriate mutual fund that suits your portfolio and investment goals.

Yes, it is important and mandatory for the investor to have an account with any bank to start investing in a mutual fund. An investor has to complete the KYC process to open an account with the bank.

It depends on the investment objective to understand for how long the investor has to stay invested in mutual funds. An investor has to review the investment status and progress periodically with their advisors. It is during such discussions, the decision whether to redeem, switch, invest or leave alone is made.

Many investors think that they will face loss if they will miss mutual fund SIP payment during the fixed period. To happen this, there can be several reasons. The investor must remember the following points:

  • Mutual fund companies don’t charge any penalty for the non-payment of SIP installment.
  • Your SIP will be automatically cancelled if you don’t pay for consecutive three months.
  • The investor’s bank will charge the penalty for discrediting the auto-debit payments.
  • To stop SIP under any circumstances the investor should put a request to the bank 30 days in advance.

Generally, mutual fund schemes don’t have any maturity period except for close-ended funds like ELSS. In case the investor passes away while the mutual funds' SIP is on or before the maturity term of the closed-ended mutual fund scheme, there is a certain procedure which is followed by the nominee, legal heir, or survivor in case of the joint holding of investment to claim the mutual fund proceeds. This process is known as transmission.

It is advised to the mutual funds' investor to add nominee always to the mutual fund investment same as any other investment. Keep the nominee updated about the same. The survivor or the nominee can request the transmission by submitting the valid documents and proofs which include the death certificate. The person who requests transmission must be KYC registered.

The answer is YES. To generate good returns from mutual fund investments it is important to have experienced fund managers. The more they are experienced, the better are chances to make profitable decisions on mutual fund investments. Not only the experienced fund manager offer their expertise and competitive nature but they also bring collective wisdom from the data and information that have their hands on.

In mutual fund schemes, the Equity-linked saving scheme (ELSS) is the tax-saving Mutual fund. In this mutual fund scheme, an individual or HUF can enjoy up to ₹1.50Lacs deduction from their total income under the section of 80C income tax act 1961. This scheme has the three years lock-in period starting from the date of allotment.

Once the lock-in period is over, an investor can redeem or switch the allotted units. ELSS mutual fund offers growth as well dividend option. An investor can invest by the SIP method. It is important to note that investment made up to ₹1.50Lacs in a financial year is eligible for the tax deduction.

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