MUTUAL FUND
Let Your Money Work for You with Mutual Funds.
What is Mutual Fund?
A Mutual Fund pools money from multiple investors to invest in various financial instruments like stocks, bonds, and other securities. Each investor owns units in the fund, representing a portion of its holdings.
Who Should Invest in Mutual Funds?
- Beginners looking to start with small investments.
- Those who prefer professional management.
- Investors aiming for diversified portfolios with manageable risk.
Mutual Fund Investment: Benefits
Wealth Creation
Helps grow wealth over time by investing in a mix of assets.
Diversification
Diversifies risk by spreading investments across various sectors.
Professional Management
Funds are managed by experienced professionals who analyze and pick the best assets.
Liquidity
Easily converted to cash when needed, offering high liquidity.
Regulated
Mutual funds are regulated by government authorities like SEBI in India.
Tax Benefit
Certain mutual funds offer tax-saving options under Section 80C of the Income Tax Act.
Frequently Asked Questions
A mutual fund is a pool of money collected from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. It allows investors to diversify their investments and professionally manage them.
The Net Asset Value (NAV) is the price at which an investor buys or redeems units of a mutual fund. It is calculated by subtracting the total liabilities of the fund from the total assets and then dividing it by the number of outstanding units.
Mutual fund schemes can be broadly classified into: Equity Funds, Debt Funds, Hybrid Funds, Index Funds, and Sector Funds, each with different risk and return profiles.
Sector-specific funds invest in a particular sector of the economy, like technology, healthcare, or energy. These funds are more volatile but offer high potential returns if the sector performs well.
Tax-saving mutual fund schemes, such as Equity Linked Savings Schemes (ELSS), allow investors to claim deductions under Section 80C of the Income Tax Act, while also offering the potential for long-term capital appreciation.
A Fund of Funds (FoF) invests in other mutual fund schemes rather than directly in securities. This provides additional diversification by investing in various funds under a single scheme.
ETFs are mutual funds that are traded on stock exchanges, similar to individual stocks. They generally track indices and offer lower costs and high liquidity.