Mutual Fund Schemes For Students: Benefits & List Of Plans To Consider

The sooner you invest your money, the more time you will get to grow and multiply your returns. So, if you are a student and want to start your investment journey, you can consider allocating your funds to mutual funds.

Investing in mutual funds today is quite easy and hassle-free. You can make investments with an amount as low as Rs. 500 via an SIP. There are also a series of benefits that you can receive by investing in mutual schemes as a student. 

Here is a detailed guide on the best mutual funds for students. 

Best Mutual Funds for Students

As a student, you can opt for any of the following mutual funds to realise your long-term financial objectives and goals: 

Name of the Scheme	5 Years Returns
Quant Active Fund- Direct Plan- Growth	23.44%
Quant Tax Plan- Direct Plan- Growth	23.36%
Nippon India Small Cap Fund- Direct Plan-Growth	21.05%
PGIM India Midcap Opportunities Fund- Direct Plan- Growth	20.72%
Quant Midcap Fund- Direct Plan- Growth	20.69%
Kotak Small Cap Fund- Direct Plan Growth	20.40 %
Mirae Asset Tax Saver Fund- Direct Plan- Growth	19.45%
BOI AXA Tax Advantage Fund-Direct Plan-Growth	19.30%
Canara Robeco Equity Tax Saver- Direct Plan- Direct Plan- Growth	18.76%
PGIM India ELSS Tax Saver Fund- Direct Plan- Growth	15.93%
Navi Large and Midcap Fund- Direct Plan- Growth	14.94%

 *Returns as of February 25, 2022

If you want to enjoy a completely hassle-free, paperless and fast investment in mutual funds, you can opt for a mutual fund offered by Navi. You can choose a wide range of mutual fund schemes as per your investment objectives and start investing with Rs. 500 only. In addition, the expense ratio of these schemes is quite nominal, ensuring more of your money goes into investing.

 Visit www.navimutualfund.com and start investing today! 

Also Read: 10 Best Medium Duration Debt Funds

Benefits of Investing in Mutual Funds for Students

These are some of the essential benefits you can receive by investing in mutual funds as a student:

More time for compounding 

An investment of Rs. 500 at a fixed interval through a SIP can go a long way in providing substantial returns over the years. If you start investing at an early age, your money will grow exponentially through the power of compounding over a longer period. 

For instance, Arun and Neha are of the same age. Arun started investing at the age of 18, while Neha started investing later when she was 24 years. Let’s assume both invested Rs. 500 a month at an average annual return of 12%. At the age of 30 years, Arun would have stayed invested for 12 years and Neha for 6 years. 

Arun’s returns would be Rs. 1.6 lakh for a total investment of Rs. 72,000. However, Neha’s returns for 6 years would be Rs. 52,000 for a total investment of Rs. 36,000. 

Inclusion of financial discipline

Mutual fund investments at a younger age can instil financial discipline. By developing a disciplined approach towards financial management, you can learn to avoid unnecessary expenses and invest instead. This will prove to be highly useful in the long run when your financial responsibilities increase. 

Meeting financial objectives 

Investing in mutual funds at an early age will enable you to get a head start for the fulfilment of your long-term financial goals. Your money will grow swiftly over the years, helping you to meet your financial objectives smoothly. 

Financial support in times of need

The money that you have invested for years in mutual funds can act as a lifeboat when you face financial struggles due to unemployment, delayed salary, recession, losses in business, etc. If you start investing at a younger age, you can get more financial back up during tough times. 

Also Read: Lump Sum Investment In Mutual Funds

Factors to Consider While Investing in Mutual Funds

You need to keep the following key factors in mind if you are interested in allocating your money to mutual funds: 

Expense ratio

The expense ratio is the charge that you need to pay your AMC for fund management, administration, promotion, distribution, etc. SEBI has capped the TER of mutual funds at 2.25% of the fund’s AUM. The higher the expense ratio, the lower will be the net returns. 

Track record of fund manager

The overall performance of a mutual fund will depend on the experience and track record of your fund manager. The fund manager will be responsible for the management of a fund’s financial assets. Make sure to check the fund manager’s previous records before investing. 

Risk tolerance

Mutual fund investment is associated with risk. Some schemes are associated with high risk, while some carry low to moderate risk. You should be aware of your risk-bearing capacity so that you can invest in suitable schemes as per your risk appetite. 

Mode of investment

There are two ways through which one can invest in mutual funds: lump sum and SIP. SIP allows one to invest a specific amount at regular intervals. It can be weekly, monthly, quarterly or semi-annually. 

Past returns

The previous returns of a scheme indicate how it has been performing. So, you need to check the previous years’ returns to assess how worthwhile it would be to invest in a scheme. Do remember, past performance will in no way indicate future performance. 

Investment objective

You need to set financial goals that you intend to fulfil through investment. It can be building a corpus for post-retirement life, funding higher studies, property purchases, etc. You can invest in preferred schemes as per your investment objectives. 

Final Word

Investment in mutual funds is an easy process today. If you are a student looking to make investments, you can refer to the list of best mutual funds for students and start investing today. 

Frequently Asked Questions

Are mutual fund investments safe? 

Mutual funds are not entirely risk-free. The performance of a fund will depend on a number of factors such as market volatility, government regulations and others. Make sure to consider your risk appetite before investing in any mutual fund scheme. 

What is a lump sum investment? 

Lump sum investment allows an investor to allocate the entire amount that he/she wants to invest in a fund at a single go. Since students do not have access to regular income, this mode of investment is not suitable for them. 

Can dividend income serve as a source of income for a student? 

Yes, the dividend income earned from various mutual funds can serve as a good source of income for a student. Asset management companies (AMCs) tend to pay out dividends to unit holders from time to time. 

What is the taxation of income from equity mutual funds?

Short term capital gains from equity funds are taxed at 15% rate with an additional 4% cess. However, Long term capital gains will attract taxes at a rate of 10% along with a cess of 4%. LTCG taxation in the case of equity funds is applicable only if your income exceeds Rs. 1 lakh in a financial year. 

Are there any tax benefits for a mutual fund investment? 

Yes, you can avail tax deduction of up to Rs. 1.5 lakh under Section 80C of the IT Act for investment in mutual funds. However, this tax benefit is applicable only for investments in ELSS (Equity Linked Savings Scheme).

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Disclaimer- Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.