Finance

Things to know about mutual funds

Money

Everyone loves it, everyone wants it , looks like the whole world revolves more around money rather than around the sun. How do you make money , there are multiple ways to do it , you can do a job , start a business , do freelance so many different ways to make it. But will that be enough?

Unless you make your money for you , you should keep working for it. Best way to make money is to grow your money you have earned. Now how do you make it grow?

With India being termed as the sixth largest economy in the world and sensex reaching the great new heights of 36k , India seems to making great progress in the financial sector . but how can you profit from this new profits Indian economy seems to be making?

Your answer is through mutual funds.

Heres your basic mutual fund q&a to help you know more about it.

  1. What is mutual fund?

A fund that is provided by an individual to finance professionals to invest in various stocks and shares.

  1. How does it work?

There are wide range of mutual funds that are as diverse as the investors goals and ambitions.

Some mutual funds are focused on creating long term capital gains(LTCG)

Some focus on creating dividend income for their customers.

Indian markets offer funds in specialized sectors that provide that are backed by the government or inflation protected debt and to maximize tax-efficiency.

  1. Why should you invest in mutual funds?

Following are the most popular reasons on why people invest in mutual funds.

  1. Larger Returns: while bank through fixed deposits only provide annual returns of only 4-6%, mutual funds on other hand have delivered around 11-15% returns over the last 10 years.
  2. Professional Backing: mutual funds are managed by fund managers who spend hours analyzing and reviewing the market growth and movements. And also mutual funds are governed by SEBI which tracks the performance of every investment making it highly secure and transparent.
  3. Little to no locking: traditional types of investments like fixed deposit provided by banks have lock-in periods during which time you cannot take out the money no matter what type of emergency you might case in your personal life. But in mutual funds you have the freedom to give and take out your money without much hassle.
  4. Diversity: since your investment is pooled in with other investors money to invest in not just one but in diverse shares portfolio to minimize the risks and increase your profits. And also these decisions are backed by expert professionals who make logical long term decisions to diversify your investment.
  5. Flexibility: whether you want to test how mutual funds will work for you or you are convinced yourself to make a long term investment, you have multiple options to choose from to help you understand how mutual funds work.

F.Convenience: investing in mutual funds is now a piece of cake. The whole process is offered online by many players in the industry. Starting a SIP or making an investment can be done in a matter of few clicks. Even tracking the performance of your investments can be done easily online.

G.Personalization: Within the world of mutual funds there is a wide variety of investment choices to pick from – equity funds, debt funds, liquid funds, tax-saving funds etc. So, depending upon your profile, goal and preference, there are various funds that are ideal for you.

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