What is Mutual Fund? In the present time, there is only a small difference between income and expenses. At the end of the month, a normal person has about 7-8 per cent of his income in the name of savings. To save this 7-8 per cent, he also has to make a lot of effort, by strangling many needs, by offering fire to many aspirations, it saves a small amount.
It is also saved so that it will help to deal with any dilemma in the time to be secured. In such a situation, if you ask someone where to keep the money safe or where to invest, one will get the answer, “Bank” is the trust of the general class bank, to the extent that they do not find any other investment order reliable. Disregarded in this sequence, a financial instrument is named “mutual fund“, the common people are often seen shrugging and avoiding it. It is said about mutual funds that they are quite risky, and there is often a possibility of sinking investment in them. This is true, but half true.
Let us first understand what are mutual funds? The amount of money deposited by a large number of investors is called a mutual fund which is put into a fund. The fund manager uses his investment management skills to invest this money in various financial instruments. Mutual funds invest in many ways that determine their risk and return.
What is Mutual Fund?
In easy language, let us understand as an example, then suppose that 100 yards (900 Sqft) of land is worth one million money. Now a person wants to invest his money in the market of land, he has to invest 10 lakh bucks at a time and it is quite impossible for a normal person. Let suppose, this piece of land becomes 100 pieces, which means 100 units, the price of one unit is 10,000 rupees. Now a group of investors in which 100 members, all of them invest their share of money i.e. 10,000 rupees to buy that land. Let’s take it. After 2 months, the price of that land increases by 20%, that is, now the land of ten lakhs is worth twelve lakhs, that is, the profit of an investor is Rs 2000.
Mutual funds also work in a similar way. Now you will think that I made you count the benefits, but what is that half-truth, the truth of that half-truth. Let us return again, now my question on that example is, do the prices of land not fall? Absolutely falls, but it happens very rarely or says that there are rare chances of this happening. People are often intimidated by calling it risk.
Mutual Fund Benefits
- First of all, mutual funds give you this freedom that you can keep your investment amount.
- The amount to be invested is often determined by how many members there are in your investment group.
- The job of finding these members will be from the same institution where you will invest.
- You do not have to worry about these members at all.
- The other advantage of mutual funds is that you can choose your own time period to invest.
- Whenever you want, you can withdraw your deposit with profits.
- The biggest advantage of mutual funds is that an investor who does not know much about the market leaves his investment in the hands of experts.
- Experts determine where, how and when to invest.
How to choose the best Mutual Fund?
Is this Mutual Fund right? But how to choose the best Mutual Fund Investment has many options but, finding the right option is not very difficult but also is not very easy. The person who earns saves money according to his earnings and wants to invest it. But, due to lack of information, they have no other option but to bank and post office. For the last few days, the most inferior investment plan is the number one investment plan. In this too, many types and many ways are invested. To understand correctly Mutual Fund, What is Mutual Fund? It is very important to know this.
How To Choose the Best Mutual Fund
I have a friend who has got very good returns by doing Mutual Fund Investment at the right time. Many times it happens that we take the advice of investment from someone who does not know anything about it himself or any of his investment plans have not been successful. Money is saved after hard work, after sacrificing many hobbies. It is very difficult to save money, especially for the middle-class family. In such a situation, if the right plan is not found, then there can be a big problem.
What is Mutual Fund?
There are many companies which ask to invest money in mutual funds. All company plans are different. For this, you have to know about Mutual Fund Types. Only after knowing about all kinds of mutual funds, you will reach the right conclusion. Mistakes often happen due to lack of correct information. Before choosing any kind of mutual fund, pay attention to your needs. Why only mutual fund and how much risk you can bear. Because where there is high gain there is also high risk and understand your objectives well. Do you want to make maximum money in a short time or want to get a regular profit? The risk factor of all plans has also been explained in Mutual Fund Types. Which risk you can easily take. After this, one should invest in whatever seems right according to the need.
All types of Mutual Funds are at risk. When after planting a tree it is not sure whether it will bear fruit or not. So it is very difficult to say even in investment. Only Real Estate is an investment in which risk is equal. But sometimes there is a risk here too. Regardless of the mutual fund, there is definitely a lot of risks. While investing in any plan, read all the documents, terms and conditions of the plan by yourself and understand it well. Many times these companies write their terms and conditions in very small letters. Understand all things and invest.
Benefits of Mutual Fund
- Mutual funds are a great way to earn money from money. Everyone wants to make money from money. Wise people do not keep their money in the bank in terms of money. They invest in either mutual funds or real estate.
- Money is also invested in the stock market with the help of mutual funds and people are engaged. By doing this, the risk is reduced.
- Those who invest in mutual funds are Investment Guru. They know where they can benefit from investing. If the money is lost then only the money of the Investor will drown, but the Career of the Fund Manager will end. That is why the Fund Manager invests money very thoughtfully.
- Mutual funds have several options. It is designed according to the capabilities of the investors. Investors can choose their preferred scheme under their convenience and earning scheme.
- You can start by investing very little money in the mutual fund. There are many mutual fund companies, who invest only 500 monthly and have the opportunity to become mutual fund investors.
- A mutual fund is a transparent scheme in every way. There are no ‘Hidden Charges’ in it. The money received from this is tax-free. But there are some rules and conditions for this.
- All the necessary information of mutual fund investment is known to the investors of all units of the mutual fund. This ensures transparency and people invest their money in it.
- Tax is very beneficial in mutual funds.
- It is more beneficial than other investments.
- Long term gain tax is zero in Equity Mutual Fund. That is, even if you sell the purchased shares after one month, there will be no tax.
The disadvantage of the Mutual Fund
- Mutual funds also have their limitations, which is very important to know before investing.
- Some mutual funds have to invest more money.
- This money is used for the regulation of mutual funds and the salary of managers.
- Sometimes even if the investor is exiting the Mutual Fund, at that time additional fees are charged under the exit load.
- The money invested in it is engaged in various markets.
- It costs many people money at once. In such a situation, even if there is a huge profit, that profit is distributed to everyone in such a way that investors do not get special benefits.
- If both sides are talked about, the Mutual Fund right is beneficial to invest in it. If you have any questions related to Mutual Fund, you can ask in the comment.
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