Mutual Fund – An Introduction

Introduction

Investment is an useful habit should be adopted by everyone looking for strong financial safety in the future. Investing some amount of money for future can be a helpful way to financial freedom in near future. It is can be a little difficult for people to decide which investment mode to select to keep their amount safe. ‘Mutual fund’ is a genuine way of investment for those looking for easy as well as a safe investment.

What is a mutual fund?

‘Mutual funds’ is a type of investment product helpful to generate income for its shareholders. In mutual funds investors pools their money together for the purpose of investing in stocks, bonds, debentures, short-term money market instruments and commodity as well. Here everything is managed by professional fund managers who are experts in managing investment and hence considered as a best way of investment. Mutual funds are easy to understand, well-managed and affordable as well. By investing in mutual funds investors becomes partial owner of the assets invested in the mutual funds.

Different types of mutual funds

There are many types of mutual funds one can avail to invest. These are main types of mutual funds amongst which investors can choose the suitable type for investment.

  • Open

This is a popular type of mutual funds where investors are free to invest as well as redeem their invested amount anytime.

  • Closed

In this type investors have to invest the amount at the starting and they can redeem it only when its tenure ends.

  • Interval

Here one can invest as well as redeem the invested amounts only on the dates one has defined previously.
Apart from this based on investments mutual funds are categories in four different types which are

  • Equity

Equity is a best choice for the investors looking for the highest return on their investment. It is a little risky but the beneficial way of investment.

  • Debt

This is safest way of investment where investors invest in the different government as well as the corporate bonds. The return provided over this investment is generally low.

  • Hybrid

This is a well-managed combination of both equity and bonds as well. Hybrid mutual fund gives average returns and a risk involve in this type of investment is modest.

  • Other

Other mutual funds include investment in real-estate, gold and commodity as well. It gives medium return and the risk involve in it is also moderate.

Why investing in a Mutual fund is beneficial?

The investment in mutual funds is always fruitful and safe. You can earn the desired profit with low risk by investing in securities including stocks, government bonds, gold and commodities as well. Still are you confused about the reliability of mutual funds then below mentioned are some proven benefits of investing in mutual funds. Go through these and have a smart investment.

1. Safest investment

The profit over investment in stock market is depends upon the performance of the market but in case of mutual funds investors need not to worry about unexpected losses due to fluctuations in the market. A mutual fund does not involve more risk as compared to stock market and returns over the investments are pre-defined.

2. Highest returns

Mutual fund is an excellent source of earning a higher return over initial investments. One can earn even more amount of 30% in first year only. In Mutual fund there is no need to invest for the longer period and within the shorter span you can earn impressive rate over your investments. The securities through which money usually get invested are selected carefully by the experts and this is a reason there is a low chances of risk in this investment.

3. Invest less and earn more

In mutual fund investors no need to invest large investment you can invest an amount of money you afford only. With very less capital amount investment one can earn more amounts within less time period. A mutual fund is a suitable way for those who can’t afford maximum investment.

4. Expert management

Mutual funds are professionally manages by the experts in a particular field. Generally these are handled by the fund managers who are expert people in the managing every issue related to the investment in the mutual funds. They take into account your objectives, capabilities, expected returns and duration of the investment and manage these parameters on behalf you to give to desired return over the investment.

5. Transparent process

Despite being a safe investment process mutual funds are transparent as well. Fund managers time to time gives you every details regarding the planning your investments and apart from this you can also avail factsheet of it on corresponding website.

6. Diversification

Mutual funds are generally depends upon the stocks and bond which are greatly diverse. It consist involvement of stocks or bonds of different industries and this is a reason fluctuation in the market does not affect the investment of mutual funds seriously. There is a possibility of increasing value of one stock while another may experience downfall and this situation bitterly balances the overall process.

How to make a profit through investment in Mutual funds?

1. Don’t give up in struggling Period

Be firm on strategy of your investment and don’t let market fluctuations scares you. Not every day is same someday there will be a downfall and some day you may also experience huge profit as well. However the situation does not let them affect your decision of investment. Be positive in every situation.

2. Increase your capital investment every year

Try to increase your initial investment every year. You can start with a less amount but you should increase this investment amount yearly when your monthly investment becomes enough to diversify.

3. Check your performance yearly

Don’t forget to take follow-ups of your investment in mutual funds yearly. Rather than checking it frequently you can check it on the yearly basis to regulate its performance. If you observe any of your fund’s performance is not performing well for more than six months, then it is always suggestible to replace it with a suitable option.

Conclusion

You might understand very well how Mutual funds can be a trusted source of earning highest return without investing more capital investment. Smart investment is always beneficial from every aspect and to experience it you should go for investing in mutual funds without fear.

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