Mutual Funds explain :
Mutual Fund is a best option for long term investing in which money is collected from many investors in the form of lumpsum or SIP and this fund is managed by best fund managers by investing the money in a portfolio of shares, bonds, money market instruments following the regulation of SEBI and generate good returns for their investors.
Mutual fund investing has been growing rapidly recently. You might be surprised to learn that people are choosing to invest their money in mutual funds rather than in gold or real estate .But still many investors do not know why it is right to invest in mutual funds and how this investment can become a multibagger in the long term.
In this blog we talk about mutual Funds in detail ,Mutual Funds Basic, types, Benefits, Risk, Return & how to Start in Beginning.
What Is Mutual Fund ?
Mutual fund is a pool of money which is collected from multiple investors. Professional Fund Managers Invest this money in Stocks, Bonds, & other securities .
In simple words you invest in Mutual Funds you are hiring experts invest your money on your behalf. Mutual Funds are created for mainly people who don’t have time to track market daily, don’t have deep financial knowledge, don’t want to take individual stock risk & want long-term wealth creation.
How Mutual Funds Works ?
Investors provide money to Funds managers For invest in Mutual Funds, All investor’s money combined into one large fund. Fund managers invest pooled money to buy stocks, Bonds, or other Securities according to Fund Objective. Based on amount investor invest & Current NAV Investor Receive mutual fund Units. As per investment Value Increase & Decreases, NAV Change. When investors sell their units they make gain & Loss.
What is NAV :
NAV is price of one unit of mutual Funds
Formula NAV = (Total value of Assets – Total liabilities) / total numbers of Units.
When you invest in a mutual fund You Don’t Own AMC, Not Directly Own Shares, You own Units that represents Proportional Ownership Of the Fund’s Assets.
Why Mutual Fund :
Before Mutual Funds investing directly in Stocks & Bonds required Deep Financial Knowledge. Large Capital, time To research And Monitors Markets. Most people lake at least one of these.
Types of Mutual Funds :
- Equity Mutual Funds
- Debt Mutual Funds
- Hybrid Mutual Funds
- Index Mutual Funds
- ELSS and Other
Equity mutual Funds:
Fund managers invest money In Stocks. Into this Higher risk, Higher Return Potential & best For long-term Goals.
Market Capitalization
Large Cap Funds Stable With Low Risk. Midcap Funds Higher Growth, Moderate Risk. Small Cap Funds High risk & high return Potential. Large & Mid cap funds Balanced Exposer.
Investment Styles
Flexi Cap Funds Invest across all market caps, Multi Cap Funds Minimum Exposure to Large, Mid & Small caps , Valued Funds undervalued stocks And Other.
Sector Funds
they focus on only one Sector like banking, Pharma, Infra, High Risk in that Dependency in A Sector.
Debt Mutual Fund
Funds Managers invest in Fixed income Instruments Like Bonds & Government Securities.
Low Risk Than Equity, More Stable Returns &suitable for Short To Medium- term goals.
Hybrid Mutual Funds
Fund managers invest in both Equity & Bonds. Balanced Risk & It Suitable For Moderate Investors. Exposure to multiple Asset Classes Reduce risk Compared to Pure Equity Investment.
Index Mutual Fund
Fund Manager track market index Nifty 50 or Sensex or other index. Low risk & No Fund manager Business.
ELLS
Invest mainly in equity Offer tax Benefits under Section 80C. 3 year Lock-in in it.
How Mutual Funds Generate Returns
Mainly return comes from capital appreciation Dividends/Interest income.
Way of Invest In Mutual Funds
Invest In Mutual Funds By SIP (Systematic Investment Plan)
That means invest a fixed amount regularly (monthly/weekly) in a mutual funds.
Invest In mutual Funds By Lump-Sum Investment
That means investing a large amount at one time in a mutual funds.
