You and many investors are investing heavily in mutual funds. Most of the money invested in mutual funds is through SIPs. A record Rs 6,222 Crores was pumped into mutual funds via SIPs, for the month of December 2017.
The Finance Minister introduced an LTCG tax on equity-oriented funds in Budget 2018-19. This has somewhat dampened the investments in mutual funds. Still, if you want to make money in 2018, mutual funds remain your best bet.
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The Government has introduced LTCG tax on equity-oriented funds from April 1st 2018. Now, you will be taxed on any long-term capital gains which exceed Rs 1 Lakh a year. This means you need to choose your mutual funds wisely and stay invested for the long term. One of the best mutual funds you can invest in 2018 are Large Cap Mutual Funds.
Mutual fund managers advise you to invest in Large Cap mutual fund schemes. Large Cap mutual fund schemes invest in stocks of large Companies, who are the leaders in their domain and are very stable.
So, if you want to make money without taking too much risk, then invest in Large Cap mutual funds in 2018. Large Cap mutual funds are ideal for conservative equity mutual fund investments.
Remember: Some very good Large Cap funds have given returns as high as 12-15% over a 3 year period.
SEE ALSO: Mutual Funds To Invest Your Money
A balanced fund invests in a combination of equity + debt. Balanced funds were the favourite of mutual fund investors in 2017.The reason for balanced funds being a super hit was, many retired people invested in balanced funds as they offered good dividends.
Balanced funds were marketed, saying they offered dividends, which was a good source of regular income. Equity mutual funds have to pay Dividend Distribution Tax of 10% after the Union Budget, killing interest in balanced funds.
Mutual fund advisors recommend balanced funds as they invest in a mix of debt and equity. This makes them safer than pure equity funds. Invest in good balanced funds in 2018 with a time horizon of 5 years.
Equity Linked Saving Schemes popularly called ELSS, invest most of your money in stocks. ELSS qualify for tax deductions under Section 80C up to Rs 1.5 Lakhs a year, and are called tax saving mutual funds.
ELSS has a compulsory 3-year lock-in. This forces you to stay invested in equities for the long term and equities are a good long-term investment. ELSS also has the shortest lock-in among tax saving investments under Section 80C.
ELSS used to enjoy the EEE benefit. But, after the Union Budget, an LTCG tax of 10% was introduced on long-term capital gains on equity-oriented funds. Now, LTCG on ELSS in excess of Rs 1 Lakh a year is taxed.
If you pick good ELSS schemes and stay invested in them for 5-7 years, in spite of LTCG, the returns you get could be much higher than most investments. Be Wise, Get Rich.
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