Like any individual securities, for profit, when you sell shares of a mutual fund or ETF (exchange-traded fund), you will have to pay taxes on the realised gain. Moreover, one also needs to pay taxes if the fund realises a gain by selling a security for more than the original price. This is applicable even if you don’t sell any shares.

Mutual fund is considered one of the safe investments as it lets investors diversify their portfolio with minimum risks.

In a mutual fund investment, a certain amount of money is pooled from different investors all having a common investment objective. Then the money is invested in various assets like equities and bonds which are based on the scheme’s objectives. An AMC (asset management company) makes these investments on the behalf of the investors.

The investment scheme by which a company pools money from investors and invests the money in securities such as stocks, bonds, and short-term debt, is called a mutual fund. Each mutual fund investment has its own objective and tries to achieve the same

If you decide to withdraw within a year of making equity investments, your gain will be taxed at a flat tax rate of 15% plus cess plus surcharge. The short-term capital gain rises if you plan to withdraw your units of equity mutual funds within 12 months.

Investors who:
• lack the knowledge or skill / experience of investing in stock markets directly.
• want to grow their wealth, but do not have the inclination or time to research the stock market.
• wish to invest only small amount

Mutual funds can be of various types. However, it is broadly classified on the basis of: Asset Class, Investment Goals & Based on Structure. A few of the types are Equity Funds, Debt Funds, Money Market Funds, Hybrid Funds, Growth Funds, Income Funds, Liquid Funds, etc.

First make clear financial goals. Now, check how much risks you are willing to take. Then do an asset allocation. Remember that different asset classes have different profiles. So one should understand that the risk and the return are directly related to each other. With a higher risk appetite, one higher allocation to equities and vice versa.

SIP or systematic planning investment is a facility you can enjoy in mutual funds. This facility is offered to investors so that they can invest in a disciplined manner. SIP helps investors to invest a fixed amount at a pre-settled price in the selected mutual fund scheme.