Mutual Funds
Mutual fund is a professionally managed investment fund that pools investment from various investors and invests in capital assets to match the investor’s financial goals.
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What is Mutual Fund?
A mutual fund is an investment vehicle where many investors pool their money to earn returns on their capital over a period. This corpus of funds is managed by an investment professional known as a fund manager or portfolio manager. It is his/her job to invest the corpus in different securities such as bonds, stocks, gold and other assets and seek to provide potential returns. The gains (or losses) on the investment are shared collectively by the investors in proportion to their contribution to the fund.
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Prospective investors can think that SIPs and mutual funds are the same. However, SIPs are merely a method of investing in mutual funds, the other method being a lump sum. A SIP calculator is a tool that helps you determine the returns you can avail when parking your funds in such investment tools. Systematic Investment Plan or SIP is a process of investing a fixed sum of money in mutual funds at regular intervals. SIPs usually allow you to invest weekly, quarterly, or monthly.
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Investing in mutual funds is one of the simplest ways to achieve your financial goals on time. But before you invest, take an adequate amount of time to go through the different fund options. Don’t invest in a fund because your colleague or friend has invested in it. Identify your goals and invest accordingly. If required, you can approach a financial advisor to help you make the right investment decisions and plan your financial journey.
Features and
Benefits
A mutual fund is a collection of investments made by individual investors and used to purchase securities in the capital market. The best part about mutual funds is that a team of experts along with the fund manager picks all the investments to build a portfolio.
With wide availability of mutual funds schemes, it is easier for an investor to choose the most suited scheme for their financial goals.
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Expert Money Management
Mutual funds are managed by professionals, providing expert guidance. The experts meticulously decide the sectors, allocation of assets, and finally buying of securities.
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Diversification
Mutual funds allow an investor to invest in diversified portfolios of equity, or debt market capitalizations and sectors and even internationally.
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Systematic Investment Plan
SIP allows you to invest a fixed amount at regular intervals and help plan your periodic investments. The is flexible and better for mitigating timing risk.
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Low Cost
Mutual fund is a cost-effective investment considering the professional expertise, diversity and flexibility. A fee ranging from 0.5% to 1.5% is charged.
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Meet Financial Goals
Each investor invests in mutual funds with a financial goal. Mutual funds with diversified portfolios & risk factors help achieve your objectives.
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Lock-in Period
Lock-in period is the duration for which you are not allowed to redeem the units of the fund. This differs across funds. For ELSS the lock-in period is 3 years.
Types of Mutual Funds
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1. Equity Funds
Equity mutual funds invest at least 65% of their assets in listed companies across market capitalizations to earn higher returns than debt or hybrid mutual funds. These funds are suitable for investors having high to medium risk-appetite along with an investment horizon of more than 5 years.
2. Debt Funds
Debt mutual funds invest at least 65% of their assets in listed companies across market capitalizations to earn higher returns than debt or hybrid mutual funds. These funds are suitable for investors having high to medium risk-appetite along with an investment horizon of more than 5 years.
3. International Funds
International mutual funds invest at least 65% of their assets in listed companies across market capitalizations to earn higher returns than debt or hybrid mutual funds.
4. Hybrid Funds
Hybrid mutual funds invest at least 65% of their assets in listed companies across market capitalizations to earn higher returns than debt or hybrid mutual funds. These funds are suitable for investors having high to medium risk-appetite along with an investment horizon of more than 5 years.
5. Solution Oriented
Hybrid mutual funds invest at least 65% of their assets in listed companies across market capitalizations to earn higher
