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Thursday, 24 December 2020

Mutual Fund Investment Guide

Are you new to mutual fund investments? 

Then refer to the Mutual Fund Investment Guide for a complete understanding of Mutual Funds. Asset Management Companies (AMCs) prepare Mutual Fund Investment Guidelines to create awareness among the people about the concept of Mutual Funds.

 

mutual fund investment guide

Mutual funds invest money collected from individuals in financial instruments such as shares and bonds. There are several categories of mutual funds: ELSS funds, index funds, and tax savings funds.

The Mutual Fund Investment Guide also helps individuals determine the money needed to accomplish their objectives. So, with the help of Mutual Funds Investment Guide, let us understand various aspects like Mutual Funds, what Mutual Funds are, how to invest in Mutual Funds, different types of Mutual Funds like Index Funds, ELSS Funds, Tax Savings Funds, Mutual Funds, Other aspects of mutual funds.

Mutual Fund Investment Guide: 

Introduction to Mutual Funds The Mutual Fund Investment Guide begins with a brief introduction to most mutual funds. As mentioned earlier, a mutual fund is an investment avenue that collects money from a variety of individuals who share the general purpose of trading shares, bonds and other financial securities. Mutual funds in India are run by AMCs or fund houses. Individuals holding mutual fund units are entitled to a proportionate share of profits and losses depending on the performance of the fund. The regulatory authority for mutual funds in India is the Securities and Exchange Board of India (yourself). Association MF Mutual Funds in India (AMFI) is another organization responsible for the growth of the mutual fund industry in India.

Mutual Fund Categories

The topics covered in the Mutual Fund Investment Guide are also categories or types of mutual funds. Since mutual fund schemes are tailored to the needs of the customer, there are different types of mutual funds. For example, a risk taker would invest in a fund that has a large share of the equity market. Conversely, a person who is at risk will invest in a plan with more exposure to debt and fixed income instruments. Mutual funds are classified into different categories based on these requirements: equity funds, TN funds, index funds, and so on. Mutual funds also offer one of the best tax saving mutual fund schemes - ELSS, a type of equity fund.

Equity Funds 

Equity funds refer to mutual fund schemes that invest a major portion of their corpus amount in the equity shares of various companies. These mutual fund schemes do not offer fixed returns, as their performance depends on the performance of the underlying equity shares. These funds can be considered as a good option for long term investment purposes. The various categories of equity funds include large cap funds, small cap funds, ELSS, sectoral funds, etc.

Fixed income funds

These funds are also known as fixed income funds, the corpus of these funds is mostly invested in fixed income instruments. Some of the assets created as part of the Debt Fund include Treasury Bills, Commercial Papers, Certificates of Deposits, Government Bonds, Corporate Bonds and more. Debt funds are classified based on the maturity profile of the underlying assets, for example, liquid funds whose portfolio includes assets with a maturity of less than 90 days or more. These funds are considered by risky investors whose risk appetite is low.

Index funds 

Index funds, also known as index tracker funds, refer to mutual funds whose performance depends on the performance of the index. The underlying assets of an index fund are equal to those held by a particular index.

Mutual Funds Investment Guide: 

Choosing the Best Mutual Funds Choosing the best mutual fund is one of the challenges that people face in investing in mutual funds. Mutual Funds Investment Guidelines to Overcome This Challenge Explain How to Choose the Best Mutual Fund The primary concern of individuals according to their individual needs is whether my mutual fund investment will give me the best return. Most individuals usually invest in a mutual fund considering its ranking which is a misnomer. Before choosing a mutual fund, individuals should first state their objectives. Without determining their objective or goal to achieve, individuals will not be able to choose a mutual fund that is consistent with their objective. After determining their objectives, individuals search for mutual funds according to their needs. 

When investing in mutual funds, individuals take into account various parameters such as the past performance of the fund, its due diligence process, credentials of the fund manager in charge of the fund, entry and exit loads attached to the fund, cost ratio of the fund, and many other related factors. In addition, they should evaluate the performance of the fund house. 

Mutual Fund Calculator

Mutual Fund Calculator This is one of the areas explained in the Mutual Fund Investment Guide. Also known as SIP Calculator, Mutual Fund Calculator helps individuals understand how much they need to invest now to accomplish their objective. Various calculators are available in terms of plans for retirement, buying a house, buying a vehicle, planning higher education and other goals that individuals want to achieve.

Benefits of Mutual Fund Investing Any mutual fund investment guide always shows the benefits of investing in a mutual fund plan. Some of the advantages of mutual funds include: Diversification in which the money collected is invested in a group of assets rather than a single asset. Professional management, which means that the management of mutual funds is done by professional managers who are also known as fund managers. These professionals invest money only after thorough research of the company. Liquidity which means that mutual funds can be easily converted into cash. In other words, individuals can easily gain access to mutual funds.

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