Systematically organized investment plans that mutual funds offers are meant for those people who get less time to analyze the whole market to invest. Many investors do not get enough time to study market and do not have proper knowledge also. But, they want to invest through various investment plans.
Taking investment plans under mutual funds offer lots of benefits. These investment plans provide a professionally managed platform for every investor. Continuous monitoring and research on market is done to provide the best income security. There is always liquidity in these investment plans like open-ended mutual funds are calculated daily.
There are generally three types of mutual funds that are taken by investors as investment objectives. One of these investment plans under mutual funds is growth schemes. Growth schemes are widely known as equity schemes also. It is the objective of this investment plan to provide medium to long-term capital investment profit. Growth schemes or equity schemes are willing to bear short-term decline in price or value because these schemes invest a large amount in equities. This investment objective provides future financial appreciation at a relatively price rate.
Other types of investment plans under mutual funds are income schemes. Income schemes are generally known as debt schemes also. These are also popular investment plans because people feel much secure with such mutual funds. The main investment objectives of income schemes are to provide steady and regular income or profit to investors. Bonds and corporate debentures are fixed income securities where income schemes invest capital of investors exclusively to get profitable return. But, capital investment profit or appreciation for income schemes might be limited.
There are index funds or schemes which are also investment plans offered from mutual finds. These financial transactions try to replicate index performance from share market fluctuations like from NSE (National Stock Exchange) 50 and from BSE. The return for these investment plans and their portfolio are based on those stocks or financial assets that constitute the index. The index weight age of the stocks is identical with the percentage of each stock of total holding. Therefore, returns from index schemes are almost similar to index stocks.
Dividend payment options are available as investment plans to pay-out dividends to investors. But, extend of dividend payout leads to fall of the NAV- Net Asset Value of mutual funds. There is dividend re-investment plan where earned dividends on mutual finds are automatically re-invested on buying stocks or share units further with open-ended funds.
Systematic investment plans are offered under mutual funds where an investor can invest directly from his bank account (debit/ post-dated cheque option). The investment will go in favor of Systematic Investment Plan (SIP). Investors take advantage from SIP which will be calculated on the basis of NAV. SIP offers stocks or shares or units in a specified pre-determined date. Investors will get offer documents comprising funds investment details.
Mutual funds investment plans also comprise Systematic Encashment Plans (SEP). Under this investment plan an investor can withdraw a predetermined financial units or stocks or shares. Investors can avail the facility to withdraw his or her fund at a pre-determined interval only. On a specified date investors can redeem their financial units on the basis of NAV.
Insurance plans are also made to provide investment plan benefits to investors under mutual funds. Insurance investment plans offer various types of insurance covers as an investment. On the other hand, balanced funds are offered to provide growth and regular earning for investors. This kind of investment plan invests in both that is in growth plans and in income plans. Investments are done periodically under this mutual fund to distribute a portion of their profit or earning. This is done on the basis of the proportion indicated in investors’ offer documents.
Apart from all these, money market investment plans are offered to investors for easy liquidity. These types of investment plans ensure the safety and security of the capital invested by an investor and also provides moderate income. Money market investment plans given for short-term safe financial instruments. Inter-Bank Call Money, Treasury bill, Certificate of Deposit and Commercial Papers can be invested under this mutual fund.