A mutual fund is a pool of money managed by a professional Fund Manager.

It is a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and/or other securities. And the income generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV. Simply put, the money pooled in by a large number of investors is what makes up a Mutual Fund.

Net Asset Value (NAV) is the market value of the securities held by the mutual fund in a scheme. You would find the performance of a mutual fund scheme denoted by NAV or the Net Asset Value. You can calculate the NAV per unit of the mutual fund by dividing the market value of the securities of the mutual fund scheme by the total number of units of the mutual fund scheme on any specific date.

Here’s the formula to obtain NAV of a fund:

NAV = (Total Assets – Total Liabilities) / Total Number of Outstanding Units

Let's begin my comparing the two so that you can decide which best fits your investment strategy. Returns on Invested Money:

FDs have a guaranteed return whereas in mutual funds there is no guarantee on the returns on investments as it is subject to market volatility. Although, in the long run, Mutual Funds earn much higher returns than FD.

All mutual funds are subject to short term and long term capital gains tax. STCG is charged at a flat rate of 15% whereas LTCG is charged at 10% of the earnings above ₹1 lakh. In case of debt funds, LTCG is 20% post indexation. FDs are subject to 10% TDS on interest earned above ₹10,000 over a financial year.

The risk involved in a mutual fund varies from fund to fund, it is mostly influenced by the market. FDs carry zero risk as the depositor will receive guaranteed returns at a fixed interest rate.

Traditionally, Indians have chosen investments that guarantee the safety of the capital and offer fixed returns. This is a significant reason behind fixed deposits (FD) and recurring deposits (RD) gaining popularity in the country. Mutual funds have also suffered because many people believe they could lose money as returns are not guaranteed. Moreover, they come with a warning stating mutual funds are subject to market risk.

While no investment is 100% risk-free, however, you need to know the following before investing:

No one will run away with your money

If you are worried that mutual funds are a type of flight-by-night scheme, then be rest assured that mutual funds are completely safe. You will not wake up one morning to find out that the mutual fund you have invested with has vanished along with your money.

Mutual fund companies are regulated and supervised by regulatory agencies such as the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI), no fund-house can abscond with the investor’s money.

Mutual Funds are meant for earning higher, tax-efficient returns

Mutual funds don’t guarantee capital protection or fixed returns. However, this is a good thing as mutual funds would be a poor investment product if they did. You should choose the right mutual fund, which is in sync with your investment goals and invest with a long-term horizon.

An investment in an open end scheme can be redeemed at any time. Unless it is an investment in an Equity Linked Savings Scheme (ELSS), wherein there is a lock-in of 3 years from date of investment, there are no restrictions on investment redemption.

Investors need to keep in mind any applicable exit load on their investment. Exit loads are charges deducted at the time of redemption, only if redeemed before a specified lock-in. AMCs usually impose an exit load to deter short term or speculative investors from entering a scheme.

Rupee-Cost Averaging: A SIP helps spread over time during both rising and falling markets. Whereas with a lump sum investment, your money would buy fewer units of the mutual fund when markets are up and more units when they are down. Thus, a SIP enables you to lower the average cost of your investment and reduce the risk of your investment. This is known as rupee-cost averaging.

Power of Compounding: A SIP enables you to regularly increase your investment amount by a fixed amount and get the benefit of compounding as you earn returns on the returns generated by your investment. This is known as power of compounding.

Less Stressful: A SIP investment is less stressful than a lump sum investment and may help you stay invested. Markets can be highly volatile and can induce you to withdraw your money in a panic, if you have made a lump sum investment. This effect is less intense when you make an investment via a SIP because your money is spread out over time.

These are tax-efficient investment instruments. For different mutual funds, the taxation is also separate.

Under ELSS, a tax benefit upto Rs. 1.5 L is available under Section 80(C). Under this there is a lock-in period of 3 years.

• Non-tax saving equity funds:

  Under long term capital gain, tax on redemption is exempted upto Rs. 1 L with 10% infection over that. Short term capital gains on debt funds, balanced funds and SIPs are taxed at 15%.

• Debt Funds:

  In case of debt funds, LTCG is 20% post indexation.

The mutual funds that have significantly higher volatile but offer high returns with a greater risk of loss are called high risk mutual funds. Large cap equity are less risky and give stable returns. Mid cap and small-cap companies have small capitalization and have scope for growth give high returns but have significantly high risk.

Selecting the right mutual fund as per your investment strategy and goal can be overwhelming. Here are some high level criteria to make your choice easier.

• Make a Strategy:

  Think about your financial situation, goals, timeline and risk tolerance before you select your investment. With the help of these answers, you will be able to make a choice based on size of company, style, credit quality etc. With this you can make a balance in your portfolio.



• Monitor Performance of the Company:

  The performance of the scheme you are interested in should be monitored at all times periodically. Past performance alone cannot guarantee future performance. But studying it over the long term may help you narrow down your choices.



• Think about the costs:

  You must look at the expense ratio of the funds you want to invest in as the costs are an important consideration. Your costs may include the management fee, distribution fee, transaction fee and other expenses. Fees differ from fund to fund, so a look into it for comparison sake would be beneficial.



• Other Considerations:

  While the three above are important considerations, a closer look is always a good idea. Consider the manager you want to work with, the capabilities of the company that manages the fund, the track history of the companies selling equity, etc.

SIPs have been regarded as the best way to invest in Mutual Funds. You not only learn to save regularly but also to invest in a disciplined manner. However, while treading on your investment path, you may come across market swings every now and then. But this should not scare you to exit the fund or stop you from investing. Like every smart investor, you should remain goal-oriented and stick to your investment horizon. Your chances of wealth accumulation would be higher when you would stay committed to your SIPs.

No, you cannot change your SIP amount anytime.

There is no maximum tenure. You can invest as long as you want to with SIPs. However, the minimum tenure is 3 years.

Different types of SIPs are available in the market like –

• Step-up or top-up SIP: This allows you to increase the investment amount automatically at specified intervals at a particular amount or percentage.

• Perpetual SIP: It allows you to keep investing for as long as you wish to without any end date.

• Trigger SIP: It lets you start investing during a specific index level, NAV, date, or event.

• Flexible SIP: It lets you change your investment amount as per your preference

• Yes, you can easily renew an SIP automatically. Companies also give you the option to cancel the auto-renew feature

• Yes, Mutual Fund companies also provide you with the option of pausing your SIP investments for a specified period of time.

A fixed deposit (FD) is a financial product given by the banks to its customers at an interest rate higher than that of a regular savings account. It is a type of investment in which an account holder deposits a certain amount with the bank at a fixed interest for a fixed period. On this amount, the bank provides the customer interest until it reaches its maturity.

A Public sector & Pvt Sector banks offers Fixed deposit to customers. In India NBFC can also offers fixed deposit to clients to raises funds – which is called as Corporate fixed deposits.

Company Fixed Deposit (corporate FD) is a term deposit which is held over fixed period at fixed rates of interest. Company Fixed Deposits are offered by Financial and Non-Banking financial companies (NBFCs). NBFCs are also allowed to collect deposits for a fixed tenure at a prescribed interest rate. Such deposits are called corporate Fixed Deposits. Similar to banks they come with the assurance of guaranteed returns and flexibility of choosing the tenure.

Yes, NBFCs that offer company fixed deposit schemes are rated for safety by Credit Rating Information Services of India Limited (CRISIL), Investment Information and Credit Rating Agency of India Limited (ICRA) and India Ratings & Research. So a corporate FD which has Good ratings from the mentioned agencies has a high degree of safety.

Corporate FDs do not have any tax benefits. Compare to Bank FD’s which is more than 5 year tenure offers tax benefits.

The interest rates on corporate fixed deposits tend to be higher than those on bank FDs . Corporate FDs offer cumulative interest pay-outs as well, which can be reinvested for compounding returns.

The minimum deposit amount required to open for the FD account is Rs. 10,000, however, it may vary from NBFC to NBFC to the other.but there is no CAP for upper limit

No interest rate for all different tenure has different RoI in corporate FD’s.

A bank mandate is an authorization you give to ICCL (Indian Clearing Corporation Ltd.- a wholly owned subsidiary of BSE) to debit your bank account for monthly investments and any other payments. The mandate is sent by invest4Edu to your bank for registration on your behalf. Once your mandate is registered with your bank, the bank will allow ICCL to withdraw the amount of your investments automatically every month. You will only need to authorize us at the time of setting up your SIP. It will also enable ICCL to collect money from your account when you make a one-time payment using your mandate.

A bank mandate is required for monthly payments for investments through Systematic Investment Plans (SIPs). The mandate you provide, allows ICCL to debit your bank account on your behalf towards SIP instalments. Thus, you will not need to make payments manually every month towards your investments.

No, you need to provide just one mandate for all your SIPs. As long as your SIP amount in any single day is lower than your specified limit in the mandate, just one mandate will be sufficient for all your SIPs.

The Reserve Bank of India (RBI) has set up a nodal authority for handling all electronic payments in our banking system. This authority is known as the NPCI (National Payments Corporation of India). NPCI has set up a new mandate process for handling high volume regular transactions. This mandate process is known as NACH, or the National Automated Clearing House system. This system is now all set to replace the ECS in the future.

There are multiple benefits for an investor under the NACH system. Apart from the simple registration process, and faster processing of payments, the NACH system also allows for one-time payments. Thus, an investor can make payments for his purchases using the mandates, without going through the payment gateway process of internet banking.

The limit is the maximum amount that ICCL can withdraw on your behalf in a single day. If you set up an SIP or make a transaction using that mandate wherein the amount exceeds the limit, transaction will be rejected.

Example – If you setup a mandate for Rs. 10,000 and start a SIP of more than Rs. 10,000 for a single day the same will stand rejected.

Yes, you can transfer your mutual fund investments from outside invest4Edu to your invest4Edu account to consolidate your holdings.

If you have any complaints, suggestions, or feedback we are happy to help. Send us an email at info@invest4edu.com providing details of the issue/s you are facing.

Access Privacy Policy and Terms and Condition by following the below steps:

• Go to Invest4Edu App and login
• Click on Profile Section on the bottom navigation
• Click on Know More Section

Here you can access the Privacy Policy and Term’s and conditions of the company

Delete your account by following the below steps:

Note: Once deleted, your account cannot be recovered. You will only be responsible for all your ongoing holdings/investments.

• Go to Invest4Edu App and login
• Click on Profile Section on the bottom navigation
• Click on Help and Support section
• Click on Delete Account
• Follow the instructions to delete your account.