MUTUAL FUNDS: its working, growth-dividend, Types, How-to-Invest, Redemption and many more......

on


MUTUAL FUNDS........KYA SAHI HAI.....??




| How Mutual Funds work |


A mutual fund is a source of investment that uses money from investors and invest in stocks, bonds, or other types of investment. A "portfolio manager" also called fund manager decides how to invest the money in an effort to generate returns in the short, medium, or long-term and for this, he is paid a fee called the expense ratio, which comes from the money in the fund

But before investing in mutual funds, however, it is essential to do your research to identify your investment needs. For instance, if you want to park your money for a couple of months or so, ultra-short-term funds are the best bet. If you wish to raise some money to meet short-term goals (less than 3 years), debt funds can help you do just that. Knowing your financial objectives clearly can help you make the most of your mutual fund investments
To achieve a long term goal, a simple funda of life is "one mutual fund for each goal " and the goal can be anything it can be your retirement fund, luxury car, daughter's marriage, child education anything. Mutual Funds always perform excellently in the long term duration considering the market risk and inflation.

An increasing number of people in India are beginning to invest in mutual funds due to the benefits they offer. There are several advantages of investing in mutual funds, and some of those that are attracting more and more investors are as follows:

  • Low investment amount
  • Diversified investments
  • Disciplined Saving
  • Attractive returns
  • SIP option 
  • No requirement to open a DEMAT account

What are Growth Funds and Dividend Funds?


Mutual funds usually come with two options – growth and dividend. Under the growth option, all profits generated by the fund will be invested back into the scheme. Under the dividend option, profits generated by the fund are not reinvested into the scheme but are paid out to investors at certain intervals of time. In mutual funds, you can either invest in lumpsum (once at a time) or in a form of SIP (systematic investment plan).



Type of Mutual Funds?


The selection of mutual funds can be done on the basis of investment duration, risk appetite, and desired goal. Here is the different kind of mutual funds available for investors to invest in India. 

  1. Based on Structure

  2. Based on Asset Class

  3. Based on Investment Goals


Based on Structure


  • Open-ended funds: Investments and redemptions can be done at any time.

  • Closed-ended funds: Investments can only made for a short period after the scheme is launched, and redemptions can only be made once the tenure is complete.

  • Interval funds: Investments and redemptions can only be made at pre-determined dates.

Based on Asset Class


  • Equity funds: They invest mainly in stocks of companies. The performance of the stocks in the stock market will determine the returns generated by these funds. They typically offer quick growth but come with relatively high risk.

  • Debt funds: They invest primarily in fixed income instruments such as securities, bonds, treasury bills, etc. These instruments come with a maturity date and fixed interest rate.

  • Money market funds: Money market funds make investments in the money market, which is also known as the cash market or the capital market. The instruments in which these funds invest are generally offered by corporations, banks, or governments.

  • Hybrid funds: Also known as balanced funds, these funds invest partly in equity funds and partly in debt funds. The proportion of investment in equity and debt securities is determined by the fund manager.

Based on Investment Goals


  • Growth funds: These funds invest the majority of their corpus in growth sectors. They are ideal for those who have extra idle money that can be invested.

  • Income funds: They are debt funds that invest in a combination of securities, certificates of deposits, bonds, etc.

  • Liquid funds: They are also debt funds that make investments in money market and debt securities with maturity periods of 91 days or less. The most that can be invested in these funds is Rs.10 lakh.

  • Tax-saving funds: Also known as Equity Linked Savings Schemes, these funds are ideal for those who wish to save on taxes and earn returns at the same time.

  • Capital protection funds: These funds essentially preserve the initial investment amount while offering marginal returns. Their main aim is to ensure that the capital is protected and are low-risk funds.

  • Aggressive growth funds: These funds come with a high level of risk and offer high returns.

  • Pension funds: These funds are ideal for those who wish to save for their retirement years. They generate long-term returns and help in securing the financial future of your family.

  • Fixed maturity plans: These funds invest in money market instruments, securities, bonds, etc. They are closed-ended plans and their tenure could be anywhere between one month and five years.




How to Invest in Mutual Funds?

Investment in mutual funds can be done either offline or online. Doing it offline would mean finding a local mutual fund advisor and letting them make investments on your behalf. To invest online, you can either invest directly on the website of the fund houses or through third-party websites like Groww, mycams, ET money, etc.

How To Redeem Money Out Of Mutual Funds?


When you decide to withdraw your money from a mutual fund, you will have to raise a request with the fund house. Once approved, you will receive the redemption amount which is basically the number of units you have sold multiplied by the prevailing NAV (Net Asset Value represents the price at which a mutual fund may be bought by an investor or sold back to the fund house. A mutual funds NAV is an indicator of its market value)of the scheme minus the exit load if any. The expense ratio is charged on your investment which remains between (0.92 - 1.93%) as a fee charged by the fund manager to manage your fund.

                                

CONCLUSION


As per all the information if you found yourself comfortable with all the mutual fund terms and condition and can hold your hard work money for your desired future goal by considering your risk appetite, then we can say that........Yes, aapke liye

   Mutual Fund.......Sahi h...😉😉



                         

Comments

Post a Comment