You must have heard the name of the Mutual funds. Mutual funds are the most popular way to invest nowadays. Many of you may know what mutual funds are, but many of my friends want to invest in mutual funds, but they don't know exactly what Mutual Funds are.
Contents
1. What is Mutual Fund?
1.1 Who manage mutual funds?
2. How Mutual Fund works?
2.1 Who is the regulator of Mutual Funds?
2.2 What are the fees (charges) of the Mutual Fund House?
2.3 Types of Mutual Fund Scheme.
2.4 Concept of Mutual Funds.
2.5 Value of Mutual Funds.
2.6 With what is the mutual fund starting?
2.7 Ways to Mutual fund investment.
Let's first learn a little about the history of mutual funds. India's first mutual fund was brought by UTI (established in 1963). India's first Mutual funds scheme was launched by UTI in 1964. After that, many companies came into this investment plan which is now giving an opportunity to invest in mutual funds.
1.What is Mutual Fund?
Have you thought that your value of money keeps declining over time? The reason for this decline is inflation (Inflation). To get rid of this inflation, people invest their money somewhere like gold, saving account, real estate, mutual fund etc. Mutual fund is currently considered popular in all of this. The money that makes you a mutual fund hardly gives you any other investment plan.
Mutual Fund generally means collective investment. Yes, mutual funds are not just invested by you alone, but many people invest. The mutual fund scheme deposits the money of many investors with the main objective of giving good returns to their investors.
In simple terms, mutual funds are a Bucket made up of money collected from many different investors. This lot of money gives the fund manager the option to use it properly by putting it in different places. The money collected in this balance is invested in stock market, bonds, money market instrument.
1.1 Who manage mutual funds?
A mutual fund scheme is run by money managers or fund managers (Fund managers). Different mutual fund houses hire fund managers according to their needs.
As you understood in the previous example, mutual funds are a booklet in which investors' money is collected. The money in this booket is invested by the fund manager in different places. It is the responsibility of the Fund Managers to manage this picket.
According to the mutual fund's target, money managers try to get benefits for its investors from the fund. The mutual fund scheme is designed in a manner that helps in achieving its objectives.
2. how does Mutual Fund work ?
– Mutual funds are also a part of the stock market. We can't all invest directly in stocks inside the stock market. For this, you have to take in-depth research and excessive time. If you are neither able to do research nor find time, you will not be able to make money by investing in the stock market.
So some of us are attracted to investments in which their money is managed by someone else for them. Mutual funds are considered to be the best in such invest plans.
The professional money manager who looks at your portfolio in Mutual funds is the fund manager who tries to increase your money by putting your money in the right place. Mutual funds provide professional fund managers to small and individual investors at very low cost.
In any mutual fund scheme, each shareholder is equally a partner in profits and losses according to their investment. Mutual funds invest in a large amount of different types of securities, reducing the risk by dividing them into different sectors.
The amount of investment in mutual funds is determined by the unit. The base of the unit is NAV (Net Asset Value) on the basis of which mutual funds are purchased and sold. The amount of money you invest is credited to your account based on the current NAV.
2.1 Who is the regulator of Mutual Funds?
All Mutual funds are regulated by SEBI (Securities exchange Board of India). Thus, investment in mutual funds is considered safe.
2.2What are the fees (charges) of mutual fund house?
Before going to any investment plan, we must get information about its fees and expenses. You must also be aware of its expenses and fees in mutual funds.
Mutual fund House charges you Expenses Ratio in exchange for your services. This Expenses Ratio goes as a fund manager's salary in lieu of handling your mutual fund. the NAV of the Mutual Fund is extracted only after reducing the expenses ratio.
Types of Mutual Fund SchemeThe mutual fund scheme generally consists of two types of plans: one direct plan and the other regular plan. If you invest through a direct plan, it is less expenses ratio.
If you invest in a mutual fund scheme through an agent which is regular plan, you will have to give more expenses ratio than direct plan. Which seems to be quite modest in terms of percentage but makes a huge difference in long term investment.
2.3 Concept of Mutual Funds
Friends, We learnt that mutual funds collect money from investors and use it to buy equity markets, securities and bonds. The value of a mutual fund scheme depends on the performance of these securities purchased by the mutual fund.
This means that whenever you buy a unit share of a mutual fund scheme, you are buying a overall performance of that mutual fund. In addition to performance, you can also consider the units deposited in your account as a part of that portfolio.
2.4 Value of Mutual Funds
The value of any mutual fund scheme is worked out per unit on the basis of Present NAV. NAV is drawn by dividing the total outstanding shares (outstanding shares) into the current value of securities in the entire portfolio.
Here outstanding shares shares are held by dharcos, institutional investors and company officials. The value of mutual funds does not change during market hours. The price is worked out only after the end of trading day.
2.5 With how much money can mutual fund be started?
You will now have the question of how much investment can be started in Mutual Funds with a minimum of rs.
Friends The biggest advantage of investing in mutual funds is that it can be started only with very little investment.
You can also start with ₹ 500 in it.Even at present, some mutual fund houses or AMC (Asset management company) offer the option to start investing from ₹100. It is the access of all types of investors to mutual funds that makes it an attractive investment option.
2.6 Ways to Mutual fund investment
Generally,Mutual fund investment we can invest in two ways. The first way is SIP (Systematic investment plan) in which you invest a certain amount in a mutual fund scheme at a certain interval.
This time interval can be 15 days, one month or quarter. This is the way the bank Recurring Deposit in which you constantly deposit money to build wealth.Mutual fund investment or
another way to invest mutual funds Lump sum. You don't have to put money in it again and again like SIP. You invest your money together in it. You can also understand Lump sum as a bank Fixed deposit.
Hi , This is Pramod Choudhary from Nagaur Rajasthan India. I an student and I would like to share my positive thinking with everyone that's my passion . Thank you
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