Mutual Funds

Mutual funds are one of the most common ways people invest by virtue of the fact of their ease of use and built-in diversity. It is an investment that pools the money of many individual investors.

It is mostly ran by experienced professionals who can buy or sell a diversified or well-mixed number of stocks, bonds, or money market securities for the fund.New investors may be sifting through the thousands of mutual funds on the market. Mutual fund investors own shares in a portfolio made up of as many as many hundred different securities. Many investors want to diversify their holdings in order to limit their exposure to risk.

Nevertheless, most individual investors cannot afford the fees and commissions required to take large positions in an amount of individual securities. Luckily, they can enjoy benefits of mutual funds. Mutual funds are designed to offer the individual investor diversification and professional money management, even with low investment amounts.

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 Mutual funds may be an appropriate investment option to consider if you’re a beginning investor, if you don’t have a lot to invest, or if you want diversification in your portfolio. 

If you are clear about which funds to buy then you need not to go anywhere just

  • Visit the mutual fund site,  select ISIP(internet systematic investment plan) of your desired scheme(choose direct plan as no middle man is involved so less expanses due to no Commission so better returns than the regular plan)
  • Fill the details of the bank, etc. and amount you wish to invest quarterly(We suggest you to choose monthly sip).
  • Mutual fund site will generate a URN(unique registration number) which you to give to your bank online while registering this fund house as biller and your bank will confirm it by Otp. 

Many years ago, investors could only buy and sell mutual funds through financial professionals:

  • brokers
  • money managers and
  • financial planners.

Thanks to online investment platforms, anyone with a computer, a tablet, or even a smartphone can buy mutual funds. 

All you have to do is

  • know where to buy them
  • what kind of fund you want, and
  • what sort of fees, sales charges, and expenses you might encounter.

 

How do mutual funds work?

There are a number of benefits to mutual funds, though it is crucial to examine the downsides, as well as your own needs, goals, and risk comfort, to determine whether mutual fund investment is right for you.

  • A mutual fund pools money from its many investors to purchase securities for the fund’s portfolio. As a result, investors typically own a portion of a portfolio that includes many more investments than they could afford to purchase individually.
  •  The value of the investor’s share of that portfolio increases or decreases based on the value of the investments in the portfolio.
  •  Every mutual fund has a specific investment objective. Most mutual funds invest in stocks, bonds, cash equivalents, or a combination of these.
  •  Within those categories, a stock fund may emphasize domestic or foreign stocks or stocks from a particular industry sector. A bond fund may concentrate on investments with either long or short-term maturities, or on government or corporate securities.
  • A mutual fund distributes its income and capital gains. As the fund buys and sells investments within its portfolio, it distributes any income received from stock dividends or bond interest to the shareholders along with any capital gains from the sale of securities.

Some of the major mistakes new investors do in Mutual funds

  • Invest without a plan

You should always be clear about why are you investing in mutual funds, whether  its short term or long term, whether it is high with higher return scheme or low risk and stable return scheme.

  • Choosing the right time to enter

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Depending upon the market, the price of these funds fluctuate, choosing the right to enter and exits will determine return on your investment.

  • Frequent shifting one mutual fund to another

Shifting your funds frequently will not land you anywhere, patience is the key.

  • Exiting in Panic

Mutual funds depends on market risk, you will see lots of ups and down, but in long run, they usually perform better than your savings account and FDs. Exiting the funds in panic is not a good move in mutual funds.