New Delhi. Investing in mutual funds is not only limited to protection from inflation, but it is also a means of creating strong assets in the long run. Investors who remain patient and invest for a long time get the huge benefit of compounding. The latest example of this is JM Flexicap Mutual Fund, which has grown its capital rapidly by giving excellent returns to its investors in the last 17 years.
JM Flexicap Mutual Fund has given us a good experience of the benefits of investing in mutual funds for a long time. If an investor had invested only Rs 1 lakh at the time of launch of this fund in 2008, its value today would have been around Rs 9.8 lakh i.e. an annual return of around 14.25%. The same investment reached Rs 4.79 lakh in 10 years, Rs 2.70 lakh in 5 years and Rs 1.73 lakh in 3 years. In fact, when the investor maintains the investment for a long time, the returns received in the initial years also add up to earnings in the future. This is the reason why returns seem to increase rapidly with time.
About JM Flexicap Mutual Fund
It is a flexicap fund, which has the freedom to invest in large, mid and smallcap stocks in any proportion. About 98.4 percent of the fund’s investment is in equity and 1.6 percent in debt. According to market cap, it includes 54.34 percent largecap, 23.78 percent midcap and 20.28 percent smallcap shares. The top holdings are Reliance Industries, L&T, SBI, Bharti Airtel and ICICI Bank. This fund is being managed by Satish Ramanathan, Asit Bhandarkar, Deepak Gupta and Ruchi Fozdar.
What is a mutual fund?
Mutual fund is an investment option in which money of many investors is pooled and invested in stock market, bonds, government securities or other assets. This fund is managed by professional fund managers, who take investment decisions after looking at the market situation. Suppose, 100 people deposit their money at one place. Shares or bonds of different companies are purchased with this big money. This spreads the risk and provides better investment opportunities. This system is called mutual fund. For those who do not want to invest directly in the stock market or who do not have much knowledge of the market, mutual fund is an easy and popular option.
What is SIP and how does it work?
Systematic Investment Plan i.e. SIP is an easy way to invest in mutual funds. In this, investors choose a fixed amount every month and the fund company invests that money in the chosen scheme.
Benefits of mutual funds
- Benefit of compounding in long term – The effect of compounding is visible when the investment is maintained for a long time. This means that you start getting returns on your returns as well, which gradually creates a bigger corpus.
- Flexibility in investment- Mutual funds provide facilities like SIP, lump sum, partial withdrawal and fund switch, so that the investor can invest as per his need.
- Opportunity to save tax – Investing in ELSS mutual funds provides tax exemption under Section 80C of Income Tax, which makes tax planning easier.
- Transparency and Regulation- Mutual funds in India are run under the rules of SEBI. All information related to investment is given to investors regularly.
- Different funds for every goal- There are different mutual funds for every goal like children’s education, retirement, buying a house or wealth creation.
(Disclaimer: Mutual fund investment is subject to market risk. If you want to invest in it, then first consult a certified investment advisor. StuffUnknownwill not be responsible for any profit or loss of yours.)
