What is mutual fund? How to Invest (Mutual Funds) in 2022

You may not know how many types of mutual funds and how to invest in mutual funds.

what is  mutual fund

however, I myself am working in an “investment consultancy and advisory” company of many renowned people in india. and, I will try to explain to you completely with my experience what mutual funds are.

Almost a large number of people, when they hear the name of Mutual Fund, without knowing anything, bring many kinds of misconceptions or ideas into their minds.

however, 70% of people do not have full knowledge of beeper and are frightened when they hear the name of the mutual fund.

So today I thought, what is a mutual fund and I will explain to you all kinds of misconceptions or things related to it.

thus, making money by investing in mutual funds has proved to be the most profitable.

and, compared to the other investment options in the market, mutual funds, of course, have been found to yield more returns on the principal rupee.

in many cases, returns of more than twice the original amount, mutual funds have come with many schemes.

I am a witness to it myself.

remember, in order to make a lot more money using this profitable medium of investment, you have to devote a lot of time.

if you give less than 5 years time, you will be able to see a good amount of returns on the money you have invested.

you can launch an investment even if you keep only Rs 500 a month or once a month.

however, the longer you invest money in a mutual fund and the longer you keep the money, the more you will get the profit of “compound interest rate”.

many people think of mutual funds and “stock markets” as one.

but that’s never true.

mutual funds and the stock market are both related to the market, although there is a lot of difference between the two.

so let’s go, below we know better, “what is a mutual fund” and “how to invest in a mutual fund”.

What is mutual fund and how to invest on it?

Mutual funds, a fund or scheme, where, like me and you, from many investors, together with money mutually( mutually), are re-incorporated into other assets in the market, such as stocks and bonds.

In this way, there are many types of mutual fund companies or Amc’s to take money from you and invest in other assets in the market.

And, every AMC or mutual fund company, to manage each individual schemes or funds, has a professional fund manager or portfolio manager.

in this, there are many educated people who have a lot of knowledge of the stock or share market.

and, if you invest the money you invest in, which assets or stock/shares in the market, they determine that it will be the most secure and profitable for investors.

and that’s what a professional portfolio manager or fund manager does.

to put it simply,
a mutual fund is a fund (fund) or scheme made up of many investors (investors).

Using the money kept here, your mutual fund company or AMC’s fund manager uses the market to invest in other assets in the market.

and, that’s what fund managers try to do so as to invest in some of the profitable assets in the market, so that investors can earn more profits or returns than the money they pay.

Fund manager / Portfolio manager :
as I said earlier, for every mutual fund scheme, there is a “fund manager” whose job is to put the money invested by the investors into the right and profitable assets of the market to earn more profits.

simply put, the job of a fund manager, the money you invest, is to take the profits you make.

so now you understand, “what are mutual funds?”.

Why is mutual funds safer than share markets?
Compared to the stock market or share market, mutual funds are definitely much safer.

because,

Stock market
when you buy stocks or shares of a company, your entire money will be placed solely on top of that company.

so, if the price of the company’s shares is lower than the price you bought, then you will lose directly.

in this case, you need to have full knowledge over the stock market or stock market.

if not, within a very short time, the money you invest can become a complete loss.

Mutual Funds

but, in the case of mutual funds, the money you invest in, the scheme or fund in which it is placed, the professional fund manager of that scheme or fund invests on your behalf, into various stocks (equities), bonds or assets in the market.

professional fund managers have a lot of knowledge about the issues associated with the market and have full knowledge of where the money you invested will be gained if you put it.

so, mutual funds are, in this case, more secure than the stock market.

moreover, the money invested in a mutual fund scheme or fund, the fund managers invest in more than one different stocks (equities), bonds or assets.

as a result, even though the stocks (equities) of one or two companies in your scheme or fund are performing badly, there will be no ill-effects on your funds.

because, there are many other company’s equities in your fund, which will reduce the risk by performing well and the returns of the entire fund become balanced.

therefore, as a result of this diversification of mutual funds, the risk here is reduced to a much higher extent.

however, mutual funds are also involved in the market and therefore, even here, in the schemes or funds involved in the equity market, if to a lesser extent, there is a risk.

Types of Mutual Funds (Types of Mutual Funds)
thus, mutual funds can be of many types. i mean, to invest in mutual funds, we have many different types of different schemes.

Read more: Why I should invest in mutual funds

the type of mutual fund can be divided into three special categories.

Divided as structure (structure).
Type of mutual fund on top of asset.
Interval funds.

1. type as structure

as a structure or structure, there are two types of mutual fund schemes.

Open ended mutual fund

in open-ended mutual fund schemes, investors can buy or sell funds or units at any time.

you can buy units and invest whenever you want or withdraw the invested money.

in this type of open ended mutual fund scheme, there is no sure time to invest or withdraw money.

and so, investors like this type of open-ended scheme, much.

Close ended mutual funds

you will not be able to invest in such closed ended mutual fund schemes at any time.

Only during NFO (New Fund Offer), you can invest in such closed ended funds.

moreover, in this type of mutual fund scheme, you have to invest money for a fixed period of time.

for example, 3 years, 5 years or 7 years.

before that, money cannot be withdrawn by selling units.

Interval Mutual Funds

the schemes of this type of mutual fund, closed ended and open ended fund, have been combined.

here, we are given the advantage of two types of funds.

Investing in interval funds schemes and withdrawing money invested here or selling units (redeem), can be done at intervals of time.

these scheduled time intervals will determine your fund house or mutual fund company.

Therefore, these types of interval funds are almost the same as closed ended funds, where investors cannot “invest” and “redeem” as per their own convenience or need.

so, structurally or structurally, we have learned above about the type of mutual fund.

now let’s also know how much mutual fund is on the asset below.

how many types of mutual funds are in the net of assets?

Debt Funds
the risk of investors in such schemes is much lower.

In debentures, government bonds, and other guaranteed means of income, such schemes invest.

so, with a much lower risk, you will invest in debt mutual funds and get about 7% interest income of 8% above the principal amount.

about, these debt mutual fund schemes are the best for investing within 1 to 5 years.

Liquid mutual funds
out of the complete mutual fund schemes, the most secure and without any fear you can invest in liquid fund schemes.

because, such schemes only invest in debt and money market instruments such as, commercial paper, government securities, treasury bills and other fixed income means.

thus, liquid fund schemes are used for investments made for a much shorter period of time.

around, to invest money for 1 day to 1 year, these liquid mutual fund schemes are the best.

you can sell the units kept here at any time and withdraw money.

Because there is no relationship with the equity market, liquid funds do not have negative returns.

that means, your money will be completely protected.

however, by subtracting into such protected liquid funds, you will get returns between 6% and 7.5% a year.

Equity Funds
if you want to earn more profit by investing money for a long time, then equity mutual funds are for you.

such schemes or funds, invest specifically in the stock market.

as a result, there is a lot of fear or risk in such equity schemes.

however, as much interest or returns as you can earn from these equity schemes, you will never be able to earn as much income from debts or liquid mutual funds.

in this case, the more risk you take, the more chance you get to earn.

in order to earn a better amount of income than equity funds, you have to pay less than 5 years.

however, due to the unorthodoxy of the market before 5 years, you have the opportunity to see negative returns.

Money Markets
money market mutual funds are much better at getting risk-free returns by investing for much less time.

so, if you want to invest money only for a few days or months, without any risk, then you can invest money in market funds.

these money market schemes, only invest in some protected places.

therefore, the money of the investors invested here is also completely protected.

however, compared to equity schemes, the income from this scheme will be less.

Balanced Funds
balanced mutual fund schemes are certain types of schemes, where there will be a mix of elements of bonds, elements of debt, and sometimes elements of the money market.

that is, the money invested in such balanced funds is invested in both equity and debt.

in such funds or schemes, investors can invest and make a good amount of income, as well as balance the risk.

then friends, your knowledge of how many types and what a mutual fund is, may have become obsolete.

now let’s find out below, what are the rules on how to invest in mutual funds.

How to Invest in Mutual Funds (How to Invest)

investing in mutual funds has become a much easier process these days.

You can easily start investing by going to any AMC (Asset Management Company) or Mutual Fund Company.

In addition to AMC’s, you can invest in mutual funds from various online mutual fund investment platforms, brokerage firms, agents and banks.

In India, there are many trusted apps and websites to invest in online mutual funds.

for example, there are mobile apps like my cams, karvy, paytm and many more, using which, people in india can invest at home.

moreover, every mutual fund company has an online investment website and app.

therefore, it is possible to invest very easily.

types of investment

you can invest here in two ways.

SIP (Systematic Investment Plan).
Onetime lump sum investment.

SIP (Systematic Investment Plan) : Sip is a way of investing in a mutual fund, where investors invest a fixed amount of money, every month or week or day, on a regular basis.

Hey, this process of SIP is almost the same as a bank recurring investment.

for example,

Imagine, you have started a SIP of Rs 1000 in a scheme or fund.

Then it will be that the $1,000 invested in your SIP will continue to be invested regularly from your registered bank every month, week or day (which you have survived), on the date you have already stated.

and, in this way, you can start investing for the future, keeping a fixed number of money every month on a regular basis.

Onetime lump sum investment : in this type of investment, investors invest a number of money in the schemes of mutual funds for just once.

I mean, let’s say I invested Rs 50,000 for once in any one scheme or fund.

then, such investments will be called onetime lump-sum investments.

Benefits of Mutual Funds

of course, mutual funds have many advantages and benefits.

and, so today people have become a lot more interested through these new investments than the old investment mediums.

so let’s go, below we know “what are the advantages of mutual funds”.

Liquidity to Enter and Exit Anytime :you can invest at any time and at the same time it is possible to redeem money by selling the units invested at any time.

Diversification for Spreading Risk :
as I have already said, mutual fund schemes are invested by its fund managers in a diversifying way into the market in such a way that the money you invest is safe and at the same time increases the chances of more income.

Professional Fund Management :
I said about that above as well. the schemes or funds you invest in, are managed by the “professional fund manager”.

so, you don’t have to think about market issues.

Invest In Smaller Amounts :
you can start investing in mutual funds from just Rs 500.

so, you can also invest here with much less money.

Best Tax Savings Option:
By investing in ELSS SCHEMES (Tax Saving Scheme) of Mutual Fund, you can take profits in terms of tax savings.

moreover, compared to other tax savings investments, mutual fund  schemes have a much shorter lock-in period.

Returns & income :
I’ve invested in mutual funds myself, and as my experience, the equity schemes here will give you the opportunity to earn the most.

compared to banks and other means of investment, mutual funds undoubtedly give us a much better amount of returns or returns.

Easy To Invest :
you can easily invest in mutual funds.

Only with ID proof, address proof and some general details, you can invest mutual funds.

moreover, in order to invest in an easier way, you can also use online processes.

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