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Oct 29, 2018

Everything You Want to Know about Mutual Funds

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Invest in Mutual Fund
What are Mutual Funds?
Another means of investment rather than Share Market is Mutual Funds. It lets you invest in securities such as stocks, bonds, short-term money market instruments and commodities such as precious metals. Investors can either invest directly or hire the services of a Mutual Fund Advisor.

Investing in Mutual Funds is the easiest and safest way to grow your wealth because it is registered and regulated by the SEBI (Securities Exchange Board of India).

The biggest advantage is for those who lack the time and knowledge to invest in the market as everything is managed by a Professional Fund Manager.
Types of Mutual Funds
There are 4 types of Mutual Funds categorized by the Securities and Exchange Board of India :

1. Equity Mutual Funds:
Equity mutual funds let the individual investors directly invest in shares of different companies and can give superior returns. But these mutual fund schemes involve greater risks as the price of shares depends on the companies’ profits and losses and hence, it directly affects the investors’ investment.
Equity funds invest minimum 65% of its corpus in equity and equity-related securities.

Equity mutual funds are for those who can stay invested for a long time and have a higher risk appetite. There are 10 different types of equity schemes available in the market to invest.

2. Debt Mutual Funds:
These securities let you invest in debt securities like treasury bills and bonds or reputed corporate deposits and are less risky than equity mutual funds as well as provide modest returns. These funds invest a minimum 65% of its corpus in fixed income securities and provide regular income.
These funds are suitable for investors whose main objective is the safety of their capital with moderate growth and risk-free income generation. There are 16 different categories in debt mutual fund investment.

3. Hybrid or Balanced Mutual Funds:
Balanced funds let you invest in both equity and fixed income funds to balance the risks and maintain a certain return rate, and hence providing stability of returns and capital appreciation to the investors.

Hybrid mutual funds generally have an investment pattern of investing around 60% in Equity and 40% in Debt instruments and are further categorized into 6 categories.
4. Solution-oriented schemes:
These are generally devised for particular solutions like schemes for retirement or schemes related to the child’s education.

These schemes span across a time period of 5 years. Now, as we are clear with Mutual Funds and its types, let us move to our next and very important topic which is:

How to invest in Mutual Funds?
Today’s digital world has made it very easy to invest in Mutual Funds and also access them from anywhere. Below are the different options through which we can invest in Mutual Funds:
1. Through Direct Investment
It involves contacting fund houses, applying for a scheme and hence, saving on brokerages.

2. Through Agents
It involves contacting Sales professionals who will thoroughly study your requirements and will then advise you to invest in the best mutual fund scheme according to your needs.
These were all the dos and dons of Mutual Funds. Although, investing in Mutual Funds is considered quite risky but if invested with proper advice and attention, it can yield greater profits and promising returns.

Hence, we advise you to properly research everything while investing so that there will be no confusions and loss of money and peace in the future.