What is Mutual Fund? How to invest?
You must have often heard the name of ‘Mutual Fund’ while talking to people on TV. You must have this question in your mind, what is this mutual fund? Let us know in today’s topic that what is Mutual Fund? Types of Mutual Funds Are Mutual Funds Right for Investment? How to invest in Mutual Fund?
Many people think that mutual funds can invest only in the stock market, but it is not so, you can invest in many different places from mutual funds.
What is Mutual Fund? How to invest?t us see (What is Mutual Fund).
What is Mutual Fund?
What is NAV in Mutual Fund?
A) Types of Mutual Funds on the basis of Asset
1) Equity Mutual Fund
2) Debt Mutual Fund
Government or company keeps on borrowing money through Debt instrument and returns it with interest. Funds which invest in Debentures, Bonds, Certificate of Deposite are called Debt Mutual Funds. Investing in these funds is less risky than equity funds and the return is also low.
Debt mutual funds are also of some other types such as,
Junk Bond Schemes
Fixed Maturity Plans
3) Hybrid mutual Fund
Hybrid Mutual Funds are those funds that invest in both equity and debt as well. We have seen that equity MF has higher returns and higher risk. And in debt MF the risk is low and the returns are also low. Hence, there is always a good balance between returns and risk in Hybrid Mutual Funds.
There are also some types of Hybrid Mutual Funds such as
Monthly Income plan
B) Types of Mutual Funds on the basis of Structure
Whatever mutual funds you invest in, they are either open ended mutual funds or closed ended mutual funds.
1) Open ended Mutual Funds
2) Close ended Mutual Funds
Advantages and disadvantages of Mutual Fund
Benefits of Mutual fund
There are many benefits of mutual funds, some of which are given below.
1) Minimal investment requirement
Investing in Mutual Funds does not require a huge amount, you can start with a small amount.
2) Professional Management
As we have seen that market money is invested in mutual funds only through experts. Due to this, investors do not need much understanding of the market.
The advantage of having a mix of investments and assets in a portfolio is to reduce risk.
4) Tax Benefits
Investments made in Tax Saver Mutual Funds are exempted from tax under section 80C.
5) Investments in Mutual Funds can also be made in Lum Sum or instalments.
Mutual funds which are not in lockin periods can offer liquidity as and when required. Meaning, if needed, you can withdraw money from the schemes.
7) Diversity and Freedom of Choice
Investor can invest in low, medium and high risk mutual funds according to his risk level.
8) SIP (Systematic Investment Plan)
Investment To do this, SIP (Systematic Investment Plan) can be done, in which some amount is paid every month from your bank account towards mutual funds.
Disadvantages of Mutual Fund Investing
The reason for the disadvantage of investing in Mutual Funds is that it carries more of the risk than Fixed Deposits (FD). We have seen that mutual funds invest in the market, due to which the growth of mutual funds depends on the performance of the market.
How to invest in mutual fund
You must have selected any one type of mutual fund keeping in mind the risk and returns. So now let us see how we can finally invest in MF?
You can start investing in mutual funds even with Rs.500 You can invest in MFs both online and offline.
There is a website and APP somewhere in the market, with the help of which you can easily do mutual fund investment and can also track how your mutual fund is performing. Below are the names of apps for some good mutual fund investments, you can start investing by signing up in them.
myCAMS Mutual Fund App
ETMONEY Mutual Fund App
PayTM Money Mutual Funds App
That’s all in today’s post. I hope you have got all the basic information of Mutual Funds through this article. Friends, you will definitely tell by commenting how you liked this post, and also share it to all your friends on Facebook, Whatsapp.