What is mutual fund and how does it work ?
Mutual fund is a scheme launched by the mutual house, which collects money from the investors and invest in various stock securities and bond depending on the investment object of the scheme. In India we have so many mutual fund companies like Birla sun life, ICICI mutual fund, HDFC mutual fund, IDFC mutual fund etc.
Type of mutual funds
We have various type of mutual fund available in the market according to the investors and their investment reason.
Debt fund - In theses kind of funds You do not need worry about risk. These Fund scheme contains securities, bonds, commercial paper gov etc. These funds can give you good returns Balance fund - These funds contains medium risk and can give you 10%-15% return annually. These funds invest up to 65% in equity and rest in debt securities.
Index fund - These funds are for high risk investors because it's return depends on index and changes very frequently. These funds blindley invest in nifty, banking nifty and sensex. Liquidity fund - These funds like fixed deposit. You can invest and withdraw according to your requirement. It gives you return better than FD.
Equity linked saving scheme - These funds will help you to save your tax u/s 80C. These scheme comes with minimum 3 years of lock period you cannot withdraw your money for this period. Equity mutual Funds - These funds invest money in different companies which gives minimum 15% of return and the minimum time period of these funds are 3 to 5 years. Beauty of SIP for optimum wealth creation * SIP is symantec investment plan. SIP is a method of investing a fixed sum regularly with the mutual fund scheme. It's like every month you are saving money which gives you good return.
Myths about mutual fund investing Most of the people think they need big amount to invest in mutual funds but it's a myth you can start only with 500 rs. Many people taking mutual funds as a big risk and they will lose all money but it's also a myth if you have knowledge about different mutual funds scheme then you will be able to get good returns.
