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4 Essential Must Have Mutual Funds for Investor's Portfolio

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Building a financial wealth is very much similar to building a house where your strategies will only define your financial objective. For building a home, different kinds of building materials, tools, designing ideas and strategies are needed. Similar to this, when one starts planning for any specific financial goal, he needs to first decide his financial objective followed by analyzing his risk profile before start investing in any particular mutual fund scheme. For varying categories of investors, mutual funds schemes also vary. For aggressive investors, mid-cap funds are appropriate choice while some financial advisors suggests multi-cap and index funds for investors belonging to low risk investment category. Overall, mutual funds are the most suitable investment options for all types of investors as they delivers the highest return on investment after the completion of a successive plan. For every investor, here are the top 5 best performing Diversified equity funds which will definitely help you in building a strong financial wealth for future.

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Equity Linked Saving Scheme or ELSS Mutual Fund:- ELSS is a perfect mutual fund scheme for all kinds of investors and serves many purposes of the investor’s portfolio. By investing in ELSS schemes, investors can save tax up to Rs 1.5 Lakh under section 80 C. It also offers stable income to the investor by way of dividend. ELSS emerges as the best tax saving investment option having minimum lock-in period of 3 years (or 5 years in some schemes) which differentiates these funds from other diversified equity funds having very long lock-in period. In ELSS funds, your fund manager line your portfolio with stock which initially produces low returns but gives maximum return after the maturity period. ELSS funds are blessing for long term investors who’re ready to bear risk even when the market fluctuates in a negative direction.

Read more about what is the tax on mutual fund income in India

Short Term Income Funds:- These funds offers a major advantage to the buyer as the fund manager can easily implement it on changing market scenario. These funds majorly invest in stocks of companies. These funds are divided as per the market capitalization & offer the benefit of professional management and diversification to ordinary investors. These funds generally produce less returns then mid cap security funds but a good option to save a decent sum for short term and medium terms goals in future.

Get more information on what are mutual fund income tax exemption

Debt Mutual funds:- Debt funds are also tax efficient mutual funds that offers an attractive return to the investor but comparatively lower than equity funds. In these funds, the income generated from these funds can be utilize as a long term capital gain but only after completing 1 years of investment. These funds are free from TDS and therefore it is highly preferred by investors who didn’t want to take risk with his hard earned money.

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Fixed Maturity Plan:- A fixed maturity plan or FMP is a closed ended mutual fund debt scheme that invests in both deposits and bonds depending on the duration of the scheme. These funds have same features and functionality like short term income funds and appear as a proven replacement for fixed deposits in terms of tax efficiency. In these funds too, the profits is treated as a long term gains only after completion of a 1 year minimum lock-in period and investors is eligible to claim indexation benefits if an investor continues it for 2 or more financial year.

These are the 4 essential mutual funds that an investor should keep in his or her portfolio. So, consult your financial planner now and start planning for your future with strategic investment approach.

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Mr. Ajay Kumar Jain, M.Sc, Chairman And Managing Director
Being the Chairman And Managing Director, he focuses on holistic investment planning and wealth management and tries to make investment planning simpler for retail and HNI investors. Investor education is one of the prime things that Mr. Ajay Jain focuses on as he believes financial education is the foundation of successful investing. With over two decades of experience, Mr. Jain has made a mark in the Indian mutual fund industry due to his compassion and sheer hard work.

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