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Mutual funds are tax-efficient: Expert
Published on Sat, Sep 02, 2006 at 22:50, Updated on Sun, Jan 21, 2007 at 17:45 in Money » Tax section
Tags: IBN Money Special, Sensex , Paromita Chatterjee
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Paromita Chatterjee: Hello and welcome to mutual fundas, special on IBN-Money, where we try and solve all your queries on mutual funds. We have got with us a very special guest, everybody familiar with in the mutual fund world, Dhirendra Kumar, CEO, valueresearchonline.com. He is here to understand all the investment options, which are there before us. In fact, mutual funds have become huge market, they have seen huge amount of growth and Indian investors like you and me have been shifting to mutual funds in a big way.
According to RBI report household savings in mutual funds are estimated a little over Rs 21,000 crore. In pure percentage term, that is 1200 per cent jump just in one year. However, it is a small portion of the total pie of household savings. Bank deposits still account for almost half, about 47 per cent. Mutual funds just account for 3.6 per cent – so there is a huge potential for growth, small savings account for a little over 12 per cent and insurance at 13.5 per cent.
So, mutual funds, they are definitely very hot, they have seen a huge growth and there are still more capacities for it to grow. “Not very much on share market, but they concentrate more on mutual funds or fixed deposits,” says Amitabh Bachchan, endorsing the fact. Amitabh Bachchan there keeping it short and simple saying, look, I invest in mutual funds and bank fixed deposits, those are the two vehicles for investments.
Today of course, we are here to talk about MFs. So, lets start with the most basic question.
Dhirendra, we heard it of Amitabh Bachchan. He loves MFs, all of us in fact actually. We have been getting thousands of queries. Tell us in one clear cut answer, why are MFs so hot? Why is everybody jumping on to it? What are the advantages of putting your money in MFs?
Dhirendra Kumar: Simple and convenient vehicle to save. Because, everywhere else your choice is difficult. Here is something, which democratises investments. With Rs 500 you can participate in equity, no other way you can do that. You can take your money back in 48 hours. And your friendly neighbourhood and the guy actually come and help you do everything.
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