Find out which mutual fund is suitable for you

India, a country of youth, is also one of the fastest-growing economies in the modern world. The large middle-class population here not only has rising income levels but also dreams new dreams every day and develops fresh aspirations. With a good per capita income, a predominance of working individuals, and a young demographic, income levels have increased, leading to greater savings. However, it is also true that if these savings are not utilized correctly, they will hold no value. The best way to utilize savings is to invest them in avenues that offer good returns, ensuring that our future dreams and plans can be realized. Every person has certain desires for their future, dreams they wish to fulfill, and responsibilities they must undertake.

For retail investors, Date Mutual Funds :-

In today's era, every investor is generally aware of mutual funds. Investments are made in the stock market to achieve maximum returns over a long period under equity schemes of mutual funds. However, many of you may not know that there are mutual fund schemes where investments are not made in the stock market. Such plans of mutual funds are called fixed income schemes. Investments in these funds are made in instruments issued by banks, corporate companies, and the Indian government. Just like your bank fixed deposit earns interest, these debt instruments also pay periodic interest to investors. The interest rates on these depend on who issued them. Corporate companies generally pay higher interest rates in fixed income mutual funds. We want to tell you that fixed income mutual funds assess where quality and better returns will be obtained, and they invest according to the objectives of the plan. Since they do not invest in guaranteed, low-yielding fixed deposits, they are capable of generating high returns. Additionally, mutual funds diversify their investments among various types of fixed income instruments, thus reducing risk and providing investors with the opportunity to earn higher returns. Otherwise, they would be compelled to invest in such guaranteed plans, usually offering lower returns.
As you all know, mutual funds do not guarantee returns, and this applies to fixed income schemes as well. Let's understand another feature with a simple example. Suppose you bought a fixed income instrument at a 10% interest rate, and meanwhile, the interest rates on similar instruments in the market decreased, say to 8%, then the value of your instrument would increase due to the higher interest rate. However, if the opposite happens, meaning the interest rates on similar instruments in the market increase, then the value of your instrument would decrease. We call this volatility in the prices of fixed income instruments.
The biggest feature of fixed income instruments, or date schemes, or date mutual funds, as they are known, is that they are potentially associated with higher returns at relatively lower risk. Fixed income instruments also offer liquidity similar to bank deposits because they can be withdrawn at short notice without any penalty. Investing in date funds also yields benefits. The tax on the dividends received from these funds is lower compared to the tax on bank deposits. That is, fixed income instruments or date funds provide you with:
1- The facility to achieve higher returns without excessive risk.
2- The advantage of higher liquidity in fixed income instruments compared to some guaranteed plans with lock-in periods.
3- Favorable tax treatment, meaning higher post-tax returns, which assists investors in achieving their investment goals.
These date schemes also offer diversity. Monthly Income Plans (MIPs) and Dual Advantage Funds are such schemes that invest the majority of their funds, approximately 80%, in fixed income instruments, while the remaining amount is invested in equity schemes. Fixed income instruments are better suited for investors who seek higher returns with minimal risk over a minimum time horizon of three years.
Most of these schemes also offer the option of receiving dividends regularly. However, there is no guarantee of returns or dividends in such schemes. Yet, it is likely that schemes with guarantees may generate higher returns and relatively lower risk than expected.