What are Mutual Funds, FDs & SIPs?

Difference between Mutual Funds, FDs and SIPs By Samyuktha Sivakumar

[{"selector":"#anim-25de2224-f300-4f8a-8d95-4be71ec07222","keyframes":{"transform":["translate3d(-114.87342%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-acedc721-b64a-4e3c-bf94-d3aa63bb5d00","keyframes":{"transform":["translate3d(-131.10236%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Mutual Funds Mutual funds are an investment vehicle, where we can invest money which can be cumulatively put in securities, bonds, stocks etc

[{"selector":"#anim-4357fee7-d7d9-4d75-9d29-9849b90a50f1","keyframes":{"transform":["translate3d(0px, 153.09764%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] People buy shares in mutual funds and their share represents a part ownership in the fund and the income it generates

[{"selector":"#anim-5b3c85c7-4278-4e4b-8c1c-2aeebf1a23b6","keyframes":{"transform":["translate3d(114.15094%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] 100% Income Tax exemption on all Mutual Fund dividends

[{"selector":"#anim-396a4b4d-c7a2-40b1-a2bc-d9502534e10f","keyframes":{"transform":["translate3d(115.09433%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Equity Funds - Short term capital gains is taxed at 15%. Long term capital gains is not applicable

[{"selector":"#anim-aaf1db6b-5b27-4937-b831-d330d2a00b10","keyframes":{"transform":["translate3d(-114.87342%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Debt Funds - Short term capital gains are taxed as per the slab rates applicable. Long term capital gains tax to be lower of - 10%

[{"selector":"#anim-5173dbd7-24c5-436b-8a25-aa20cd0b3dbf","keyframes":{"transform":["translate3d(-115.18988%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-45a1cc04-f35c-4b33-b65c-8d554115c0c6","keyframes":{"transform":["translate3d(-97.22864%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Fixed Deposit A Fixed Deposit offers greater returns on the principal invested compared to the returns generated from a savings account

[{"selector":"#anim-bfcac6f1-d989-4f9a-9370-fe294ff0a257","keyframes":{"transform":["translate3d(-115.14196%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] People need to deposit a considerable amount as a one-time payment for a fixed time frame

[{"selector":"#anim-bc659d5d-a9bf-4a08-b519-1d554ae561b1","keyframes":{"transform":["translate3d(0px, -329.2989%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Investment Tenure ranges from 6 months to 10 years

[{"selector":"#anim-7468f8a6-e6c9-42e2-ba65-645061c05461","keyframes":{"transform":["translate3d(-115.14196%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Interest Rate comes from 2.75% – 7% p.a. Minimum Investment starts from Rs.500

[{"selector":"#anim-32aff566-996b-42e0-91d1-3091671f2c45","keyframes":{"transform":["translate3d(-115.28663%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Tax is incurred on the basis of the income tax slab under which the individual falls

[{"selector":"#anim-22ea6189-db90-48c9-a2d2-1cb2d7a43bfc","keyframes":{"transform":["translate3d(0px, -215.63651%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-f5afc733-bf54-4fdf-b811-f2b24fc8937c","keyframes":{"transform":["translate3d(0px, -371.34512%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] SIP Systematic Investment Plan (SIP) allows the investor to invest a fixed amount at regular intervals in an MF scheme

[{"selector":"#anim-68e0e742-b8a7-4c59-b134-56f37ec59073","keyframes":{"transform":["translate3d(-114.87342%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] With this people can invest money in a hassle-free manner, without waiting for a seasonal time

[{"selector":"#anim-67b7b990-4b54-4b7b-8887-c5469746fc0f","keyframes":{"transform":["translate3d(-116.50485%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Minimum Investment Starts from Rs.500 A return of 12-18% can be expected whereas from mid-cap equities, a return of 14-17% is expected

[{"selector":"#anim-39016aa1-2534-4f62-af88-fcde3c70d174","keyframes":{"transform":["translate3d(-115.14196%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] In case of a long-term debt-based mutual fund, one can expect a return of 6 – 9 % p.a.

[{"selector":"#anim-1d95a51b-89b0-4292-826b-cd45b0f9ec49","keyframes":{"transform":["translate3d(-115.18988%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] However, 15% tax is charged if the units are sold within a year