Sunday Gyaan! Learn about the basics of Mutual Funds Investment

With the ever-growing inflation rates in today’s world, saving money is not itself enough to ensure financial stability in future. Now, investment has become an important aspect of one’s life, and with the intellectual support of various companies in investment sector, it has become quite easy to make investments nowadays. There are many types of investments that one can make for monetary profits. Today, we will try to the understand a kind of investment which is getting too popular nowadays i.e. mutual fund investments.

What is mutual funds investment?

At present, mutual funds investment is an emerging type of investment which is getting popular among the masses. In mutual funds investment, money is invested in various sectors instead of just one, so as to get overall gain. So the simple fact is in mutual funds investment, your money is not invested in just one place, rather it is invested in many different places or sectors. This ensures that there is no overall loss as it is highly impossible that all the sectors will suffer loss at the same time.

 

 

Who invest our money in mutual funds?

There are many companies one can prefer to invest in mutual funds. These companies are known as Asset Management Companies (AMC). AMC takes money from different people and invest in many different sectors. AMC has a team of experts who decide and cautiously invest people’s money in different sectors. After the end of investment term, AMC returns the money along with the profit to the investor after deducting their commission.

Types of mutual funds?

There are three types of mutual funds namely equity, debt, and hybrid funds. Equity funds include stock market, shares of companies, gold, silver, real estate etc. These have a greater risk but their returns are also very high. Debt funds include govt bonds, insurance policies, fixed deposits, term deposits etc. These don’t have risk but the returns are also low. Hybrid funds are a mixture of both debt funds and equity funds. These are less risky than equity funds and give you moderate returns.

 

 

How to invest in mutual funds?

Mutual funds are greatly helpful in long-term investment. You can choose any AMC which will guide you through the further process of starting a mutual funds account. There are two ways of investing, lump sum and SIP. In lump sum investment, you can invest a large amount of money at once. But if you want to start small, SIP (systematic investment plan) is the best option.

What is SIP?

 

 

In SIP, you can choose an amount (like Rs 1000 or 2000) which will be deducted from your account monthly. This money will be taken by the AMC you choose and they will use the money to invest in various types of mutual funds. SIP is a great way of investment if one is looking for a long-term investment. There is no time period for SIP so it can be stopped anytime. But it is highly recommended to choose an AMC with utmost care.  Always remember that mutual funds investments are subject to market risks, so read the scheme information and other related documents carefully before investing.

 



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