What are the typical instruments that you think of, when you want to invest? A bank fixed deposit, to begin with? Perhaps it has been ingrained in us since our childhood that a bank deposit is the safest instrument around. Then, maybe a Public Provident Fund account and, if you are salaried, then your Employee’s Provident Fund that gets deducted from your monthly salary. The former because it helps you save taxes (under section 80C of the income tax Act) and the latter because you have, well, little choice.
But there is another instrument you should consider because it helps you grow wealth over a long period of time, a mutual fund (MF). We’ve come a long way since the country’s first MF was launched—although technically it wasn’t called one—in 1964. With close to 3,000 MF schemes spread across 45 fund houses and combined assets under management of Rs.14 trillion, choosing the right fund is like finding your way through a maze. But keep aside the numbers for a moment, and let us focus on some first principles. Team Mint Money tells you what you need to know before you dig into the numbers. What is a mutual fund and why it works and when it doesn’t work?
