What is Mutual funds? Are Mutual Funds a Good Investment? Types & Charges

What is Mutual Funds?

If you do not have a good knowledge of the stock market or you do not want to risk the stock market and want to make money then mutual funds are a good option for you because it is managed by professionals, which reduces the risk. Happens and returns.  Get well

A Mutual Fund is a fund in which a lot of people have money and the company invests that money in many places.  Investing in many places reduces the risk because one company can make a loss while the other can make a profit.  Mutual funds have a lot of investors' money in one place and this fund is used to invest in the market.  Mutual funds are managed through asset management companies (AMCs).  Each AMC usually has several mutual fund schemes.

Anyone can invest in mutual funds.  You can invest up to a minimum of Rs 500.  Both Indian residents and NRIs can invest in mutual funds.  You can also invest in the name of your spouse or children.  If your child is a minor (below 18 years), you will need to provide your details while making investments in his/her name.  You will manage the account till she/he turns 18.  Even partnership companies, LLPs, trusts and companies can invest in mutual funds.

For those who do not know much about investing in the stock market, mutual funds are a good investment option.  Investors can choose a mutual fund scheme according to their financial goals.

How many types of Mutual Funds are there in the country?

1. Equity Mutual Fund
2. Debt Mutual Fund
3. Hybrid Mutual Fund
4. Solution Oriented Mutual Fund

Equity Mutual Fund:

These schemes invest the money of the investors directly in the shares.  These schemes can be risky in the short term, but in the long term, they help you earn great returns.  Your return from investing in this type of Mutual Fund scheme depends on how the stock is performing.  Investors whose financial goal is to be completed after 10 years, they can invest in this type of Mutual Fund scheme.  There are also 10 different types of Equity Mutual Fund schemes.

Debt Mutual Fund:

These Mutual Fund schemes invest in debt securities.  Investors can invest in these to meet short term financial goals.  It is okay to invest in them for a period of less than five years.  These mutual fund schemes are less risky than stocks and give better returns than bank fixed deposits.

Hybrid Mutual Fund:

These Mutual Fund schemes invest in both equity and debt.  Even while choosing these schemes, investors need to keep in mind their risk appetite.  Hybrid Mutual Fund schemes are divided into six categories.

Solution Oriented Mutual Fund:

Solution Oriented Mutual Fund schemes are made according to a particular goal or solution.  These can be goals like retirement scheme or child's education.  You need to invest in these schemes for at least five years. 

Mutual Fund Charges:

Expense ratio is the sum of all the expenses incurred in a mutual fund scheme.  From the expense ratio, you get to know what is the cost per unit in managing a mutual fund.  Generally, the expense ratio is 1.5-2.5 % of the weekly net asset average of a mutual fund scheme.

How to invest in Mutual Funds?

To invest in mutual funds, you have to open an account in Groww, after that you can invest in mutual funds as well as share market gold and many places from the same account Click to open Groww account.