Why Mutual Fund Is The Best For Investment
Do mutual funds and stock market appear all Spanish and German to you? But don’t you also want to learn the art of investing and better. Well, this article might actually help you.
Do mutual funds and stock market appear all Spanish and German to you? But don’t you also want to learn the art of investing and better.
Well, this article might actually help you.
What are Mutual Funds?
Mutual funds can be understood as a fund house which mostly is an asset management company, calling for investors.
Now the investors could be anybody, an individual or an institution. The investors pool in their funds and provide it to the fund house.
These funds are managed by a fund manager. He is responsible for investing these funds ahead, according to the interest of everyone. The fund’s house might buy stocks or bonds.
The profit earned out of the investment is distributed amongst the investors on the basis of the share they hold in the investment.
What Are The Types of Mutual Funds:
Mutual funds could be categorized into several types.
However, in India, they are of 4 major types:
- Open-Ended Funds
- Close Ended Funds
- Interval Funds.
Open-Ended Funds: Liquidity is its USP. The investors can invest and withdraw their money at any point in time. It does not have a specific maturity date.
Close Ended Funds: This scheme works on a predetermined maturity period. It allows it’s investors to invest only during its New Fund Offer period. After that, nobody is allowed to make any new investments.
Interval Mutual Fund: This scheme is a mixture of the Open-Ended Funds and the Close Ended Funds. It often allows it’s investors to make investments during its investment period.
Mutual Fund Is Categorised as:
Equity or Growth Funds: These funds are pooled with an objective to generate wealth. They primarily invest in company shares and give greater returns. These include large-cap, small-cap, mid-cap and several other kinds of schemes.
Bond or Fixed Income Funds: These are known for the safety features and primarily invest in fixed securities like government securities, bonds etc. These include Liquid funds, Gilt funds, etc.
Hybrid Funds: These are known to invest in both equities and government securities. Child plans and pension plans fall into this category.
What Are The Top Mutual Funds :
Some of the best performers of the year 2020
- Mirae Asset Tax Saver Fund
- Mirae Asset Emerging Bluechip Fund
- Quant Tax plan
- Axis Focussed 25 Fund
- Parag Parikh long term equity fund.
These are the top mutual funds companies you can invest in these or others as well depending on your budget.
Know The Best Scheme To Invest In:
You could go through several lists that rank different mutual fund schemes based on their performances. However, their best might not be in your best interest.
Before you invest, you must be clear with your goals and the amount of risk that you can digest.
If you wish to invest for a period of two years and have a considerably small appetite for risk, a bank deposit or debt mutual fund would be suitable for you.
Investment is subjective, and therefore if you have any investment plan. It is better you do that after a brief consultation with investment advisors.