Mutual funds can offer several tax benefits to investors. Here are some of the main tax benefits of investing in mutual funds: 1. Tax-Deferred Growth: One of the primary tax benefits of mutual funds is that they offer tax-deferred growth. This means that any capital gains or dividends earned by the mutual fund are not taxed until the investor sells the mutual fund shares. This can be especially beneficial for long-term investors who are looking to save for retirement. 2. Diversification: Mutual funds offer a diversified portfolio of assets, which can help to reduce the overall tax burden. By investing in a mutual fund, investors can spread their investment across a range of securities, which can help to mitigate the tax impact of any individual investment. 3. Capital Gains Distribution: Mutual funds are required to distribute any capital gains they earn to their shareholders. However, investors can benefit from this distribution by offsettin...
Mutual Funds returns are calculated by computing appreciation in the value of your investment over a period as compared to initial investment made. Investors can earn returns through mutual funds in three ways: 1. Income from stock dividends -Income can be earned in the form of dividends from the shares and interest on bonds included in the investor's portfolio. Investor either can retain or invest the dividend received by him. 2. Capital Gain from securities sell- Mutual fund can earn capital gain from the securities sell by the fund manager and they pass on this profit to the investors of the respective schemes. 3. Capital Gain in the value of scheme -Capital Gain is earned by the investors if the value of the scheme increased from the cost of investment. One should avoid the temptation to review the fund's performance each time the market falls or jumps up significantly. For an actively-managed equity scheme, one must have patience and allow reasonable time - between 18 and...