How a mutual fund works
You buy units of a fund at its NAV (net asset value per unit, worked out every business day). A professional fund manager invests the pooled money according to the fund's stated objective. When the investments rise, the NAV rises; when they fall, so does the NAV. Funds are run by asset management companies (AMCs) regulated by SEBI.
The three big families
| Family | Invests in | Suits goals | Risk |
|---|---|---|---|
| Equity funds | Shares of companies | 5+ years away | High |
| Debt funds | Bonds, government securities, money market | Days to 3 years | Low to moderate |
| Hybrid funds | A mix of both | 3–5 years | Moderate |
Within equity, funds are grouped by company size: large cap, mid cap and small cap.
SIP or lump sum
A SIP (systematic investment plan) invests a fixed amount every month (or every day); a lump sum invests all at once. SIPs suit salaried saving and spread your buying over market ups and downs. Try the calculator above, or the step-up SIP and lumpsum calculators.
Costs: direct vs regular plans
Every fund has two plans. Direct plans are bought straight from the fund house (or platforms that offer them) and carry a lower expense ratio. Regular plans include a commission for the distributor who advises you. Over 15–20 years, a 0.5–1% yearly difference adds up to a large sum.
How gains are taxed (FY 2026-27)
| Fund type | Held up to 12 months | Held longer |
|---|---|---|
| Equity-oriented (65%+ in Indian shares) | 20% | 12.5% on gains above ₹1.25 lakh a year |
| Debt-oriented (more than 65% in debt), bought from 1 Apr 2023 | Slab rate | Slab rate |
| Others (e.g. many hybrid, gold and international funds) | Slab rate up to 24 months | 12.5% after 24 months |
Dividends (IDCW) are taxed at your slab rate. Budget 2026 left these rates unchanged.
Before you invest
- Keep an emergency fund and clear costly debt like credit card dues first.
- Write down the goal and the year you need the money.
- Pick the category that fits that horizon — see best SIP plans for a simple framework.
- Read the riskometer and the scheme documents.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully.
For general information only, not investment advice or a recommendation. Oxon Fintech is a loan facilitation platform, not a SEBI-registered investment adviser, bank or mutual fund distributor, and does not sell bonds, deposits or funds. Rates and rules are as checked on the date above; confirm with the issuer, bank or fund house before investing. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.