There’s always some money you can save each month, if you scrimp on your expenses a bit. Like, taking public transport instead of the cab, eating out less, not buying that dress you aren’t likely to wear more than twice. Think about it. There are so many avoidable expenses which can turn into savings. And once you invest in mutual funds, you’ll shock yourself with the sizable returns.

It’s an easy 1-2-3 decision-making process

1. SIP or Systematic Investment Plans allow you to invest small savings on a regular basis. This mode of investment has historically given greater returns than lump sum investments in Mutual Fund Investment Plans. It’s easy on the pocket too.

2. Always look at the taxes when you invest in mutual funds. Because a very sizable chunk of your bounty could simply go to the taxman. There are a variety of Mutual Fund Investment Plans that not only give good returns but are exempt from Income Tax under some sections. Look for them.

3.Don’t overlook the Mutual Fund charges because under one heading

 or another, you’ll be gifting away your income from the investment to the mutual fund. Now why should your money enrich someone else? Therefore, clarify all fees and applicable charges.

A little diligence and you can be comfortably rich, without much inconvenience. Call that mutual fund agent right away!

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Direct participation in the equity markets is very risky. However, it requires considerable caution. Chances are that if you go in without thinking, nothing can stop your ship from sinking. Yet it requires constant dedication and vigilance, and who has that kind of time, right? In such a scenario, invest in Mutual Funds; because the fund managers will do the thinking for you, and they’ve got all the time and expertise to do it well. Like they say, choose the manager, not the fund.

But before you decide to invest in Mutual Funds, take note of these 5 points:

1.    SIP is best: Systematic Investment Plans, where small monthly investments are made on your behalf in the Mutual Fund of your choice, have proven to generate better returns over a long-term.

2.    Diversification: For a smaller investment amount, you get invested in various sectors and different stocks.

3.    Timing not relevant: With Mutual Funds, you get more units when NAV is down. In the long run, whether the markets are down or up, you profit.

4.    Fees & Charges: Carefully check whether your profits aren’t being squandered in entry & exit loads, switching charges, annual expenses, service costs etc.

5.    Tax benefits: Taxes might gobble up all your gains, or even increase your liabilities. So carefully go through which sections of the IT Act apply when you invest in Mutual Funds.

Think long-term, think better returns, think Mutual Funds.

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Where should one park his/her savings? Invest in Mutual Funds or walk in to the nearest bank to start a fixed deposit?

Most of us will choose a fixed deposit in a scheduled bank over Mutual Fund investment, the simple reason being that the returns from fixed deposits are constant.

It isn’t true

The Fixed deposits in banks might give one close to 9% interest. But when you factor in the rate of inflation, which was 6.5% in the month of September 2014, the actual rate of returns from your investment in Fixed deposits will be less than 3%. Seems astounding?

But what about Mutual Fund investment?

A study by a leading Asset Management Company (AMC) found out that equity funds have given an annualized return of 23% between April 1997 and September 2014. Some growth funds have even given investors annualized returns of 27%. The striking thing to note here is that even investing in CNX Nifty stocks would have only given an investor annualized returns of only 13%.

The retail journey

How will a retail investor get the right advice for Mutual Fund investment? The right advice becomes more crucial in case of investors with limited knowledge of Mutual Funds. Following are some of the factors which you should look in a Mutual Fund distributor before you invest in Mutual Funds:

•    Years of experience of the distributor

•    Capability of the distributor for to service you post your investment

•    Educational qualifications of the Mutual Fund distributor

•    Testimonials from earlier customers of the distributor.

Don’t let your savings earn lower returns by investing in Fixed deposits. Find out a trusted distributor and invest in the best schemes of top performing Mutual Funds.

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