Investment Categories for Mutual Fund Investment Plans

No two individuals are similar. Quite naturally, their investment needs and choices will be different. Every investor has one thing in mind, and that’s to optimize their profits. No matter which channel and avenue they are investing in, profit maximization seems to be the prime objective. If you are planning to invest in Mutual Fund India market has to offer, knowing about the diverse features will be important.

Depending on your investment opportunities and risk-taking capabilities, you will come across various categories. Check out these aspects that determine mutual fund investments in India.

Knowing the investment categories

Mutual fund investments involve asset classes, and investors have the opportunity to diversify investments. The various crucial features and highlights of mutual fund investment plans include horizon, risk-taking capabilities, and investment requirements. Here are some of the important categories you should know about:

  • Open-ended schemes: Investors have complete flexibility to enter or exit these schemes. High liquidity happens to be a significant benefit of these schemes. Since they are bought and sold all year round, investors enjoy unmatched flexibility.
  • Close-ended schemes: If you opt for this particular category, you will have the flexibility to sell specific units. What investors need to keep in mind is that they aren’t supposed to make investments when the NFO period terminates. Entry and exit isn’t that flexible as in open-ended schemes.
  • Interval schemes: These schemes ensure dual benefits. They contain the advantages of both open-ended and closed schemes. Investors can take trading decisions at predetermined intervals.

Categorization of investment goals

Mutual fund investments can be classified according to investment objectives. Since every investor is different from the other, choosing the right plan emerges as a crucial option for them. Categorization takes place by investment goals, and here are some of the options in this regard:

  • Equity schemes: Equity investments are perfect options for those preferring capital appreciation. If you wish to accumulate wealth over a significant period, investing in equity funds will be a great decision. Investors enjoy complete flexibility while choosing their preferred investment option. The presence of dividends ensures huge benefits and positive returns.
  • Debt and income schemes: Income schemes play a crucial role in ensuring steady cash flow. If you are planning to invest in this particular category, you will have the following choices:
  • Government securities
  • Corporate debentures
  • Bonds
  • Money-market instruments

Most importantly, these funds don’t get affected by fluctuations in the equity investment markets. Those planning to opt for low-risk options will enjoy optimum convenience in this regard.

  • Balanced funds: Investors can get the best of both worlds by investing in balanced funds. They will reap the benefits of income securities along with capital appreciation. By striking a 40-60 balance in investments, they will have the opportunity to ensure moderate growth!

Signing off

While planning to make mutual fund investments, make sure you have these categories in mind. They will help you determine the investment decision and earn huge returns. Analyze the categories, schemes, and start planning.

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