Mutual Fund

                                    Mutual Fund

March is about to approach. This is the time to plan for tax planning on the basis of your last year income and plan for coming year too.Investment and Insurance are important part of financial planning. Mutual Fund plays vital role for your investment planning.



investment, What is Mutual Fund: 

Mutual fund is one type of investment vehicle by which you can deposit your money with them to get better return comparing to bank deposit like FD/RD. Mutual Fund companies launched some investment scheme where they invest these money in shares, Bonds , Debentures , Real Estate and other assets according to pre announced investment objectives.


Today bank is offering interest rate @ 6% pa on Fixed Deposit. It means if you keep Rs. 100 with bank FD you are going to get Rs. 106 after one year. Now if we compare this return with inflation we can get actual figure of our return on investment. Lets say inflation is 6%. It means the thing which we used to get at Rs. 100 one year earlier now the new cost for the same will be Rs. 106. Now comparing with inflation your bank return yield is big ZERO. In developing country interest rate is bound to go down with improved economical condition. Some statistics says at least 2% of interest may go down in a span of ten years. Though current inflation is in range of around 3.9% hence 6% of bank interest still good compared with inflation.

Do you know how you can calculate how long will take to double your money in Bank FD? I am sharing you a simple formula to calculate. That is #formula72 . Just divide 72 with current interest rate you will get the result. If interest rate is 6% then it will take twelve long years to double your money.To double your money in ten years you need interest rate of 7.2 %. Time to double your money will take more time when your interest will go down further.

What is Inflation :

Inflation is increase of general price level of goods or services in an economy over a period of time. In simple word increase of cost of living.

Inflation statistics:
2021 : 4.07 % (Projected)
2020 : 4.09 % (Projected)
2019 : 3.44 %
2018 : 3.43 %
2017 : 3.60 %

Mutual Funds are nowadays offering 10-12 % of return on investment subject to market condition. Some different type of mutual funds also offering more than of this.

Hence Mutual Fund is good and only alternative to beat inflation.

I will share more details of mutual fund in my next blog post.