Mutual funds offer diverse investment options categorised into three main types. These are equity, debt, and hybrid funds. Equity funds invest in the stock market, carrying higher risk with a potential for greater returns. They include ELSS, large-cap, mid-cap, small-cap funds, sectoral and thematic funds, etc. Debt funds focus on fixed-income assets like corporate debentures and government securities. They provide relatively stable returns with lower risk. Hybrid funds combine equity and debt investments, balancing risk and returns.
Asset management companies (AMCs) offer various mutual fund options. They can be classified based on market capitalization, investment duration, and so on. Multi-cap funds invest across company sizes and sectors. Sectoral funds focus on particular industries. Investors can use an SIP calculator to plan regular investments in these funds. Conversely, they could use a lump sum calculator to determine returns for one-time investments.
Understanding different mutual fund types helps align your financial goals and risk tolerance. For example, ELSS funds offer tax benefits under Section 80C of the Income Tax Act. Debt funds include overnight funds, liquid funds, money market funds, etc. Hybrid funds offer sub-types like aggressive and conservative options. Investors could also explore other mutual fund types to best match their investment horizon.
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