Mutual fund companies introduce different systems. There are many categories in funds.
Different fund categories:
- Equity, Debt, Hybrid, Balanced and Liquid are the main categories. In general, investing in mutual funds is risky. Since the market status is not always stable, it involves a high level of risk.
- Of all the categories, equity funds are the riskiest. On the other hand, they have high returns. Stock programs have many subcategories. Diversified Equity, Large Cap, Equity Linked Saving Schemes, Sectoral and Index and Exchange Traded are some of them.
- Debt systems are less risky. Debt programs are invested in government organizations and corporations. Because the risk is lower with these plans, the returns are also lower.
- A balanced plan is the mix of debt and equity. As the name suggests, everything about this plan is balanced. Both the risks and the rewards are good with these balanced plans.
As there is more competition, a larger number of plans will be introduced. Various techniques such as SIP and VIP are currently being put into practice. A systematic investment plan was introduced to appeal to the middle class and rural population. The total investment can be paid in equal monthly installments in SIP. Volatile markets need techniques like Value Investment Plan. Certain schemes are economical and have practical utility. Some of them are listed below.
- Magnum Tax Gain was introduced by SBI. It has tax exemption opportunities. A tax exemption below 1 lakh is permitted here.
- Chota SIP was also introduced by SBI. Monthly installments here are only in the 100 to 500 range.