Question 1

What is a mutual fund?

Accepted Answer

A mutual fund pools money from many investors and invests it in stocks, bonds, or other assets — managed by a professional fund manager. You own units proportional to your investment. The value of those units (NAV) goes up or down based on the performance of the underlying investments.

Question 2

What is a SIP?

Accepted Answer

SIP stands for Systematic Investment Plan — a method of investing a fixed amount in a mutual fund every month on a specific date, like a recurring deposit but in the markets. On your SIP date, the amount is automatically debited from your bank account and invested. You accumulate units at different prices each month, which averages your cost over time (rupee cost averaging).

Question 3

What is the minimum amount I can invest in a mutual fund?

Accepted Answer

Most mutual funds accept SIPs starting at Rs. 500 per month. For a one-time lump sum, the minimum is typically Rs. 1,000 to Rs. 5,000 depending on the fund. There is no maximum limit.

Question 4

What is ELSS and how does it save tax?

Accepted Answer

ELSS (Equity Linked Savings Scheme) is an equity mutual fund that qualifies for a tax deduction of up to Rs. 1.5 lakh per year under Section 80C. For someone in the 30% tax bracket, this saves up to Rs. 46,800 in tax. ELSS has a 3-year lock-in per installment — the shortest lock-in of all 80C options. After 3 years, gains are taxed as LTCG at 12.5% above Rs. 1.25 lakh.

Question 5

Are mutual fund returns taxable?

Accepted Answer

Yes. For equity funds: gains above Rs. 1.25 lakh per year are taxed at 12.5% if held more than 1 year (LTCG). If held less than 1 year, gains are taxed at 20% (STCG). For debt funds (since April 2023): gains are added to your income and taxed at your slab rate regardless of holding period.

Question 6

What should I do when markets fall sharply?

Accepted Answer

Do nothing — or invest more if you can. Every significant fall in Indian markets has been followed by recovery. The Nifty 50 fell 52% in 2008 and recovered in 18 months. It fell 38% in March 2020 and recovered in 6 months. Investors who sold locked in losses and missed the recovery. Keep your SIPs running — a falling market is when your SIP buys the most units cheaply.

Question 7

Mutual funds vs Fixed Deposits — which is better?

Accepted Answer

FDs give 6–7.5% returns, fully predictable and guaranteed. Equity mutual funds have historically given 12–14% over 10+ years but can be negative in any given year. For money you need within 2 years, FD is the right choice. For money you can keep invested 7+ years, equity funds have consistently outpaced FDs. Also, FD returns are taxed at your full slab rate while LTCG on equity funds is taxed at 12.5% above Rs. 1.25 lakh.

Question 8

Is my money safe in a mutual fund?

Accepted Answer

Mutual funds are regulated by SEBI. Your money is held in a separate trust — not on the fund house's balance sheet — so even if the AMC faces trouble, your units are safe. Equity fund values go up and down with the market (market risk), but they are protected from fraud and AMC insolvency.

Question 9

What is a liquid fund and when should I use one?

Accepted Answer

A liquid fund invests in very short-term debt instruments (up to 91 days). It is the safest type of mutual fund — returns are typically 6–7% per year, and money can be withdrawn within one business day. Use it for your emergency fund, for parking a lump sum before moving it gradually into equity, or for holding money you need within 1–3 months.

Question 10

Can I stop my SIP anytime?

Accepted Answer

Yes. SIPs can be paused or cancelled at any time online — no penalties, no exit charges for stopping the SIP itself. The units you have already accumulated remain invested and continue to grow. You can restart the SIP whenever you want.

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Questions clients ask us — answered plainly

Getting Started

SIP Questions

Fund Types & NAV

Tax & ELSS

Safety & Risk

Market Behaviour

Comparisons

Process & Platform

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Everything you need to knowbefore and while you invest