Investors in the present era are found in quite a dilemma as there is the abundant availability of financial tools. These business tools are meant for the betterment of the investors so that they can meet their financial requirement at the right time. But the increase in the rate of inflation influences the rate of interest offered in all sorts of financial tools. Here is sneak peek for the readers to get to know about the types of mutual funds:
Tips for a middle-class investor:
Stay away from risks. The inflation rate in the market as well as the low-interest environment, the risk-free schemes to be quite attractive.
Tips for a well-to-do investor:
You can have a tough time in deciding the appropriate type of mutual fund to put your money in. The investors first have to know their risk appetite and then go for investing their penny in any financial tool. But one must stay away from the schemes which have inferior liquidity.
What is Duration risk?
The duration risk is the risk of returns that comes up due to a long period of investment. A significant fall in the interest rates is also seen in these funds. The volatility of the market is notorious enough to be predicted. Hence, it is an individual call to decide on whether to invest in the duration risk funds or not.
What is credit risk?
Credit risk funds are offerings in the category of mutual debt fund that is invested in lower rates and comes with least risk prospects. These can have higher risks in future, but as of now, these are safe schemes to put money in.
What can investors do?
If you are a fixed income investor with a higher capital for investment, then you can try out investing the money in different sorts of financial tools. But it is essential for someone to know the risk appetite he or she has. This mostly has its impact on the choice of the appropriate scheme. Lastly, investors may pay heed to identify the prospects of gain or loss.
What is Arbitrage Fund?
Arbitrage funds are the ones which help an individual to pay minimal tax. They are the tax treatment financial tools and are equity0oriented funds. These sorts of funds are free from any taxation if the investment is for the long term and the capital amount in below a lakh rupees. An exciting and witty move that can be taken by the investors is investing a maximum of Rs. 15 lakhs before 31st March 2020 and claiming returns of Rs. 1 lakhs without any tax. This can be repeated for a year until the laws of taxation changes.
Hence, one needs to know in details about the financial tools in which the money is invested. When the returns are going to affect your financial stability as well as goals, you cannot be easy-going with the investment approach. Research about the financial tools thoroughly to understand the scheme and then put your money in them. You can always rely on your research, and this is why research work plays one of the most important roles.