The Basics Of Mutual Funds
Salman Khan
Last updated on May 2025 | 4mins read
The Basics of Mutual Funds: A Smart Investment Option
In India, mutual funds have become one of the most popular investment vehicles, thanks to their potential for high returns, professional management, and diversification. However, many new investors are still unclear about how mutual funds work and how they can be a part of their wealth - building strategy. In this blog, we’ll help you explore the basics of mutual funds, how they can help you build wealth, and why they should be a key part of your investment portfolio.
1. Why Mutual Funds Are Worth Your Attention
As more and more people start investing in the stock market, mutual funds offer a safer and easier entry point. According to a report by the Association of Mutual Funds in India (AMFI) (AMFI), mutual fund assets in India have grown to over ₹37 lakh crore and SIPs reaching ₹10,000 crore monthly, highlighting the increasing awareness and popularity of mutual funds.
2. Understanding Why Mutual Funds Are So Important for Indian Investors
In today’s rapidly evolving economic climate, traditional savings like fixed deposits and savings accounts are no longer enough to outstrip inflation, which has been averaging 6-7% annually in India. While bank FDs yield only around 5-6% returns, mutual funds can provide returns ranging from 12-15% annually, depending on the type of fund and market conditions.
Why it matters: Mutual funds reduce risk through diversification, allowing you to invest across various sectors, industries, and asset classes.This allows you to access higher returns while reducing potential losses, making them an essential part of a balanced portfolio.
3. How Mutual Funds Can Solve Your Investment Woes
Mutual funds pool money from multiple investors to invest in a variety of securities. And it is designed in a way to cater to investors with varying risk appetites and financial goals. Whether you are planning to save for retirement, your child’s education, or simply to grow your wealth, mutual funds can help you achieve these goals with professionals ensuring that your money is well taken care of.
Types of Mutual Funds:
- Equity Funds: These funds invest primarily in stocks and aim for high returns. Over the past decade, equity mutual funds have given an average return of 12 - 15% annually. (high-return high-risk)
- Debt Funds: These invest in bonds and other debt instruments. Debt funds are safer but lower returns (around 6 - 8%).
- Hybrid Funds: These funds invest in both equity and debt. Balance between risk and reward. They typically offer returns of 9 - 10%.
- Index Funds: These funds track the performance of a market index, such as the Nifty 50 or Sensex. Index funds are known for their low - cost, passive investment.
4. How Mutual Funds Can Grow Your Wealth
Imagine you start investing ₹5,000 per month in an equity mutual fund that generates an average return of 12% annually. After 10 years, your investment could grow to over ₹13 lakh. That’s the power of compounding combined with professional management. Now contemplate how this wealth - building approach can help you achieve your financial goals like buying a home, funding your child’s education, or securing a comfortable retirement.
5. Steps to Get Started with Mutual Funds
Now that you understand the basics of mutual funds, here’s how you can start:
- Choose the Right Mutual Fund: Do some fact-finding or consult with a financial advisor to choose a fund based on your financial goals and risk threshold.
- Start an SIPs: Start investing ₹1,000 - ₹5,000 per month. The earlier you start, the more you’ll benefit from the power of compounding.
- Diversify Your Investments: Spread your investment in all types of mutual funds like equity, debt, and hybrid funds to counterbalance risk and return.
- Monitor Your Investments: Track your mutual fund investment regularly and make changes if required based on your financial goals.
How We Can Help You
At ELEVAITE CAPTUM, we offer personalized mutual fund advisory services. Whether you’re a first-time investor or an experienced one, we’re here to guide you in selecting the right mutual funds that align with your financial goals.
- Personalized Fund Recommendations: Based on your risk profile and financial objectives.
- SIP Planning: We can help you start and optimize your SIPs.
- Investment Tracking: Regularly monitoring your portfolio to ensure it stays aligned with your goals.
Contact us today to start your investment journey!
📧 Email: support@elevaitecaptum.com
📞 Phone: +91 7416050055/7416150055 (Mon–Fri, 10 AM – 6 PM IST)
Important Disclaimer: Investments in mutual funds are subject to market risks. Please read the scheme information document carefully before investing. Past performance is not indicative of future returns.
