Taxation and Investments

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What is Balanced Mutual Fund?

The Investors who are afraid of Share Market fluctuations, who want to protect their Capital and still want to have some exposure in Equity for some capital appreciation can invest in Balanced Mutual Funds.  In the current market situations, when everyday’s news whatever it may relate to, affect the ups and downs of prices of the shares.  So, it is essential to have some balance in the Investment Portfolio to get better returns or avoiding big losses.

Whenever the Stock Market went down, the debt instruments have returned well and leveraged the losses many times.  So, it is clear as we need to have a balance of Equity and Debt in our Investment Portfolio.  But most of us are busy in our work schedule and we are unable to devote our time to have a watch on the market.  So, Investors can invest their money in Balanced Mutual Funds and these funds are managed by well qualified Fund Managers who have set of team to analyze the market then and there and take decisions on the percentage of Equity and Debit exposure in Investment from time to time and deliver good returns possible.

Three Types of Balanced Funds

Balanced Funds are of three types, Hybrid: Equity Oriented, Hybrid – Debt Oriented Aggressive and Debt Oriented Conservative (Balanced Funds are also called Hybrid Funds).

  • Equity Oriented
        >  The Equity exposure in these funds is more than 60%
        >  Remaining in Debt, i.e. 40%
        These funds are more suitable to those who want equity exposure in their Investments as well as Debt.
  • Debt Oriented Aggressive:

          >  The Equity exposure in these funds is about 25-60%
          >  The Debt exposure is about 40-75%

        These funds are recommended to those who are the first time investors in Equity and  have exposure in Share Market.

  • Debt Oriented Conservative:                                                   

          >  The Equity exposure is in the range of 0-25%
          >  The Debt exposure is in between 75-100%

        Usually, Senior Citizens and those who retired and have no regular income can invest in these funds to meet the rising expenses in their later years.

Since the need for Equity in every Investment Portfolio is inevitable to beat the inflation these types of funds help the Conservative Investors to protect their Capital and some returns to have a hedge over the returns from the Investment.
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