Mutual Fund
Managed by a professional fund advisor, mutual fund allows the investors to pool their money into a diversified selection of funds. Mutual fund offers array of investment options namely fixed maturity plans, exchange-traded funds, sectoral funds, and much more.
Benefits
Let's glance at some benefits you can avail from investing in MFs
- Your money can beat inflation as MF generates inflation-adjusted returns. It is an ideal choice to park your savings in MF for a long term inflation adjusted growth
- Your money is in safe hands as MFs are handled by experienced financial advisors. They handle all financial decisions based on the performance and prevailing market condition
- MF investment offers you the convenience of the ability to sell or buy them on any business day. It offers multitude of choices based on your goals, objectives & risk appetite
- Investing in MFs are relatively inexpensive, you can begin with just Rs.500 and enjoy the benefits of long term equity investment
- MFs help mitigate risks to greater extent as your investment portfolio is spread across a diverse range of assets
- MFs offer liquidity i.e. you can get your money back quickly. Based on medium or long term investments, your investments have potential of giving you higher returns
- Investments in MF are regulated by SEBI and your fund managers provide regular updates on how your investments are performing along with the strategy & outlook
How It Works?
A Quick Walk-Through As To How Mutual Fund Really Does Works:
- The money collected in the pool is then invested in stocks, bonds, money market instruments related to the fund's investment objectives
- Your choice of investing depends upon your financial goals & aptitude for risk. Your Financial Advisor will guide you in arriving at a conclusion
- You can invest in either Equity & Debt MFs
- An equity fund is a MF that invests in stock
- Debt MFs invest in fixed income securities like corporate bonds, money market instruments, treasury bills, Government securities
- The most prevalent type of MFs operate on open-ended basis, which means its continuously sells shares to new & existing shareholders or buys back from shareholders who are selling
- Close-Ended funds operates for a fixed duration & has fixed number of shares outstanding
- Funds in close-ended can be subscribed or redeemed only during a specified duration
- Net asset value NAV represents the market value of each unit of a fund or the price at which investors can buy or sell units
- MFs are traded on the basis of their NAV (Net Asset Value). Unlike stock price, which changes through out the day, MF NAV are updated at the end of each trading day
What Is SIP
- SIP is a smart & hassle free way of investing in mutual funds.It is a planned approach towards investing & inculcates a habit of savings regularly
- SIPs are the way through which you can generate wealth & build a path towards achieving your financial goals
- It allows a pre-determined amount to be auto debited from your bank account & invested in a mutual fund scheme of your choice
- The amount is debited at a regular intervals that can be either weekly, monthly or quarterly
- Once your money is invested, you are allotted a certain number of units which are based on the current market rate or known as NAV (Net Asset Value)
- What is NAV you wonder; NAV is the per-unit value or per-unit price of a particular mutual fund scheme
- So every-time your money is invested through SIP method, additional units of the chosen scheme are purchased at their current rate & added to your portfolio
- SIPs method of investing has many benefits to it like it factors in disciplined saving habit, allows flexibility, long term gains & convenience