Understanding Of Mutual Funds For Beginners ...

 


         Hello Friends!!! We already have disused today's  topic in my previous blog https://priyankavanshika.blogspot.com/2020/10/save-money-grow-money.html .But today we are going to discuss more about it. So before investing first let's understand about mutual funds. Some people think that mutual funds are only stock market investment. Means organizations investing in mutual funds invest your money in equity or stock market. But it is an investment in gold, real estate and debt funds also. “What is the difference between investing in the stock market and investing in mutual funds?” When you are  investing in the stock market you are the boss. It means you have enough knowledge of the stock market. One thing is If you invest in the stock market you have to invest high money for purchasing expensive shares such as blue chip or A grade stocks. It means a big amount of your money is invested for purchasing that share itself . In mutual funds, mutual fund organizations take small amounts of money from different people that have money invested to purchase that blue chip and A grade stocks. This collected  money invests in different opportunities, when these organizations gain, they distribute some percent of it between investors. Every mutual fund company comes up with different mutual funds types.No doubt there is risk in the stock market and mutual funds too.

 Types of Mutual Funds 

  1. Equity mutual fund => collect money from people and invest in the stock market.

  2. Debt Fund=> collect money from people and invest in debt (risk is less because there is no stock market)

  3. Hybrid Mutual Fund=> it is little bit equity and little bit debt

  4. Solution Oriented mutual Fund=> it is for time period solution, after particular time period you can exit your moneyfor example Child Education Fund, Child Marriage Fund, etc.

  5. Other Mutual Funds=> collect money from people and invest in index funds such as Nifty and Sensex.

                

    There is one more type of mutual fund called Liquid Fund. Liquid mutual fund is a type of mutual funds that invest in securities with residual maturity of upto 91 days. For example if  I kept my money in a savings account I would get 4-5% interest. So I decided to invest in a Liquid mutual Fund. In a liquid mutual fund, it takes my money for a short time from investors for 1 day to 91 days. Liquid funds don't have lock up periods. Maturity period up to  91 days. Liquid funds have less risk. Return on investment most of the time would be 7% to 8% which is higher than saving account interest. If you want to exit from these mutual funds you can exit any time. Tax should be payable in this mutual fund.

Obviously there are some advantages and disadvantages of mutual funds. 


Advantages of Mutual Funds :

  1. You can invest less money but you will get diversification.

  2. You will get fund manager expertise by investing less money too.

  3. You can link your bank account to SIP (Systematic Investment Plan) which helps to directly invest your money in SIPs.

  4. Investment is flexible which means you can withdraw your money anytime .


Disadvantages of Mutual Funds :

  1. Some organizations are not focusing on the profit of mutual funds, they only focus on collecting money from people.

  2. If you redeem your money from mutual funds and you are in loss due to a fallen market but the investment manager wants to invest more in stocks. in that case loss will be applicable for both mutual fund managers and you.

  3. Mandates of mutual funds are restricted due to which you will not gain profit as per your expectation.


I think now we are more clear with mutual funds. I hope this information helps you. Thank you !!!

Comments

  1. Abhishek14 October 2020 at 21:37

    Hey, I find it quite informative. This explanation should clear everyone's doubt s about the same.
    They often get confused in that technical terms described on the financial websites.

    ReplyDelete

Post a Comment

Popular posts from this blog

Secrets Of Black Tea.

Image
  Black Tea or Milk tea, Which is better?    Hey friends with a very good afternoon and yes this is my first blog ,i want to say something not only good  but also important  for you. Everybody  starts the day with refreshing tea. I also drink  tea which is healthy, makes me  refreshed and energetic.       As we know almost everyone in india or any other country starts their day with milk tea, coffee, lemon tea, green tea, etc. Mostly in India people from a long time start their day with milk tea. Most of the people consume tea 3-4 times daily. My family, friends, even in my office people are crazy for it. I only drink black tea, not any other tea. First I will tell you the recipe. After that we will see the benefits of it.   Black Tea:      Recipe:         1. Boil some quantity of water. Add very less quantity of tea leaves or tea powder.        2 . Add sugar or jaggery.       3 .Add ginger or cloves to enhance taste.       4 . After boiling, filter it.                 It has a stro
Read more

What Can I Do For Self Improvement?

Image
  Self Improvement Ideas : Hello friends !!!!  I think many of us feel lazy, feeling alone and don't want to do anything sometimes. So in such a  time we can do many things to improve ourselves. There are a lot of things that we can do to get self motivated. Self motivation means increasing knowledge, decision making, overcoming weakness and increasing strengths and confidence. Self improvement means learning constantly. Continuous learning is good for our mental growth and increases productivity. Here are some ideas that I share with you to improve ourselves. Reading Books : Books are always good friends of ours. Reading is a very good habit, you should read a book daily. When you are reading you feed your brain with knowledge. Read biography of great persons, motivational stories and  novels, good articles, etc. You can learn many things by reading the biography of great persons and inherit some good qualities from them wh
Read more

5 Must Have Medicinal Plants For Your Home Garden :

Image
  Medicinal Plants : Hello Friends !!! Hope you all are doing well. Many of you love gardening, people growing plants at their home for different purposes. Some plants are decorative and some plants are medicinal. In India, we worship plants as god .Our mother nature blessed us with a lot of beautiful plants. Plants play a very very important role in our lives. Long time ago our ancestors also used plants as medicine, at that time there were no chemical drugs, so all medicines were herbal medicine. In Ayurveda plants are used as medicine, some medicinal plants available in forests and some are in our nearby areas and gardens. Today we are discussing some plants which we can easily grow in our garden and which are medicinal. Basil : Basil is an Indian herb commonly known as “Tulsi” normally found everywhere in India. It is generally of two different types one is “Green Basil” other is “Black Basil” . Green basil leaf and steam are m
Read more