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Investing means making your money work in line with your financial goals, it also means maximizing your real rate of returns. There are many different ways you can go about making an investment. This includes investing into Equities (also called stocks), Fixed-income (also called bonds), Cash equivalents (a type of liquid investment such as a money market fund, gold), others (Company fixed deposits, Post Office Schemes, Real Estate, New Pension Scheme) based on your risk tolerance and time horizon. The point is that no matter the method you choose to invest, the goal is always to investing your money to work so it earns you an additional profit.

Why choose Mutual Funds?

A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want. Investing in Mutual Funds offers several benefits:

  • Professional expertise: Fund managers are professionals who track the market on an on-going basis. With their mix of professional qualification and market knowledge, they are better placed than the average investor to understand the markets.

  • Diversification: Since a Mutual Fund scheme invests in number of stocks and/or debentures, the associated risks are greatly reduced.

  • More choice. Mutual funds offer a variety of schemes that will suit your needs over a lifetime. When you enter a new stage in your life, all you need to do is contact our financial advisor who will help you to rearrange your portfolio to suit your altered lifestyle.

  • Relatively less expensive: When compared to direct investments in the capital market, Mutual Funds cost less. This is due to savings in brokerage costs, demat costs, depository costs etc.

  • Liquidity: Investments in Mutual Funds are completely liquid and can be redeemed at their Net Assets Value-related price on any working day.

  • Transparency: You will always have access to up-to-date information on the value of your investment in addition to the complete portfolio of investments, the proportion allocated to different assets and the fund manager's investment strategy.

  • Flexibility: Through features such as Systematic Investment Plans, Systematic Withdrawal Plans and Dividend Investment Plans, you can systematically invest or withdraw funds according to your needs and convenience.

  • Tax benefits. Investments held by investors for 12 months or more qualify for capital gains and will be taxed accordingly (10% of the amount by which the investment appreciated, or 20% after factoring in the benefit of cost indexation, whichever is lower). These investments can avail benefits of indexation.

  • SEBI regulated market: All Mutual Funds are registered with SEBI and function within the provisions and regulations that protect the interests of investors. AMFI is the supervisory body of the Mutual Funds industry.  (Source: National Institute of Securities Markets)

Need Analysis > Asset Allocation > Portfolio Construction > Ongoing Review

Mutual Fund Type

Investment Objective


Investment Portfolio

Suitable for

Investment Horizon

Index Funds

Returns commensurate with Index returns

NAV varies with index performance

Portfolio indices like BSE, NIFTY etc

Dynamic Investors

3 years plus

Equity Funds

Long-term Capital Appreciation

High Risk

Equity Stocks, Growth Fund, Balanced Fund Stocks

Aggressive & Long term Investors

3 years plus

Gilt Funds

Security & Income

Interest Rate Risk

Government Securities

Salaried & Conservative Investors

12 months & more

Bond Funds (Floating- Long-term)

Regular Income

Credit Risk & Interest Rate Risk

Predominantly Debentures, Govt. Securities, Corporate Bonds

Salaried & Conservative Investors

9 months -12 months

Short-term Funds (Floating -short-term)

Liquidity + Moderate Income

Less Interest Rate risk

Call Money, Commercial Papers, Treasury Bills, Certificate of Deposits, Short-term Govt. Securities

Those with surplus short-term funds

3 weeks – 3 months

Money Market Funds

Liquidity + Moderate Income + Capital Reservation

Negligible risk

T-Bills, Certificate of Deposits, Commercial Papers, Call Money

Investors in current a/c or short-term bank deposits

2 days – 3 weeks

Source: Bajaj Capital


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