What is Mutual Fund?

You must have heard about Mutual Funds. But do you know what is a mutual fund?. Its name suggests that the mutual fund is a fund. Where a large amount of money is deposited by investors. Funds deposited by an individual or entity of a company are called Mutual Funds.

Mutual Funds are an investment scheme in which a certain amount or amount of money is deposited by the investor and this amount is invested in different sectors such as government funds, a scheme, stock market, etc.

Investors in Mutual Funds are managed by investing money to earn the most possible profits. It is not that you should have more money to invest in mutual funds, in this you can invest only 500 rupees per month.

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How does Mutual Fund work ?, Mutualfunds

The amount deposited by the investor is invested in different sectors by professional fund managers. To invest this money, the Mutual Fund Manager according to himself decides when and where to invest the money. The mutual fund manager first determines the risk and return. Invests after that. The funds are invested in such a way that maximum capital gains or income can be obtained for the investors of the fund.

A highly qualified professional fund manager is appointed by the fund house to do this work. Because of this, a certain fixed amount is deducted from your profit due to running your fund. All mutual fund companies are registered with the Securities Exchange Board of India (SEBI) which approves Asset Management Company (AMC) for fund management.

History of Mutual Funds

Mutual funds in India started in 1963 with the formation of the Unit Trust of India (UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. Its main objective was to attract small investors, to make them aware of the topics related to investment and market.

• The UTI was set up in 1963 by the Reserve Bank of India under an Act of Parliament. It was founded. Initially, it worked under the RBI. After that UTI was separated from RBI in 1978.
• The first phase of the development of Mutual Funds started in India from 1964.
• The second phase started in 1987, in which the entry of the Public Sector Fund started.
• The third phase began in 1993. Private Sector Funds were approved in this phase.
• The fourth phase started in 2003 which is still going on. In 2003, UTI was divided into two separate phases. The first SUUTI and the second UTI Mutual Fund, which worked as per the rules of SEBI MF.

Know Before Mutual Funds Investment

First of all, you have to decide how much money you can invest and how long you want to invest. If you have to invest for a short time, then it is said to invest separately and for more time then there will be separate mutual funds for that.

If we talk about the entry load and exit load charge in the mutual fund, then there is no chart in either the entry load nor the exit load. But if you withdraw money before the limit, then some mutual funds charge exit load through companies. Therefore, while investing, see which schemes have a minimum exit load or not.

Risk-taking ability, Mutual Fund Risk

You have to take more risk to get higher returns, so before investing, you should think about how much risk you can take for this investment. If you look at the security of capital invested by you in investment, then higher returns matter.

If you do not want to take too much risk so that the value of your investment declines, then in such a situation you will have to choose funds in which returns and risks are balanced. So that your capital is safe and returns are also received.

Previous Year’s  Performance

It is not necessary that the previous year's performance of any Mutual Funds will be better, it will be better in the future. This will only help you in choosing your favorite fund scheme because you will get an idea of the average returns so far from different funds.

From the previous performance of the fund in which you want to invest, you can make a guess on how the performance of this fund has been in the previous year. In this, you can know that its performance is not very different from market fluctuations and the economy. Do this before choosing a fund.

Types of Mutual Funds

How To Select Mutual Fund
Now it comes to mind that if you have made up your mind to invest in mutual funds, then it should be known that there are thousands of mutual fund schemes of dozens of companies in the market. It is very important to know this before investing.

Equity Mutual Funds:-

An equity fund is also called a growth fund. Investing in equity funds for small amounts is considered risky. Therefore, the investment made for a long time in this scheme is better because it gives good returns in it. Equity funds are divided into 10 types, such as large-cap, mid-cap, small and micro, according to market capitalization.

Debt Mutual Fund:-

Debt Mutual Fund is a less risky mutual fund. In Debt Mutual Fund you can invest for a short time. When compared to an equity fund, the risk in debt fund is very low risk. This fund is considered good for small investors i.e. Investors investing less amount.

Hybrid Mutual Funds:-

Hybrid Mutual Funds are considered a mixture of both Equity Mutual Funds and Debt Mutual Funds. Because these are medium risk mutual funds. The ratio of debt and equity in a hybrid mutual fund is determined by the fund manager, depending on the expected return from the fund.

Direct Plan Vs Regular Plan

Mutual Fund Direct Vs Regular Plan
The regular plan is the follow that your fund is managed by someone else. This includes the distributor commission. That is, the distributor is paid every year for these schemes. The commission is 0.5% to 1% of the fund value. Whereas direct schemes do not include any distributor commission. 

All investors invest in regular plans. Because you do not have to do anything other than invest in it. All further work is done by the manager. But this is not the case with the direct plan. Fully Experts are invested in the Direct Plan.

How to Invest Mutual Fund?

In mutual funds, you can buy any plan of any company both offline and online. By investing, be sure which asset management company you have to invest in. Different types of mutual funds have different performances, so check the portfolio and past performance too.

Investing in mutual funds is a very good option due to low-interest rates in banks. A long-term investment in a mutual fund can yield higher returns. Earlier some people thought that it is difficult to invest in it, but now more and more people can easily invest in it by the convenience of the app or online.

To invest in Mutual Funds, you have to fill a form that you can fill online or offline. And you can invest. After this, you can sell or buy funds both online or offline.

What is the unit.

When many investors invest in a fund together. So that fund is divided into equal parts. Which is called a unit.

What is nav.

The price of a mutual fund unit is known as Net Asset Value (NAV) per unit. The fund's NAV is calculated by dividing the total value of the portfolio by the total number of outstanding units. Mutual fund units are bought or sold at the current NAV of the fund.

What is SIP.

The full form of SIP is the Systematic Investment Plan. In which the investor invests the pre-determined amount per month.

Mutual Funds Advantages and Disadvantages

As you know, Mutual Fund is a volatile market. There is a possibility of profit in this, as much as there is a possibility of loss. The profit and loss of some important mutual funds are explained below.

Benefits/ Advantages of Mutual Funds 

Benefits from investing Mutual Funds is that it is expected to get a good return with minimum risk. The biggest benefit of a mutual fund is that in the long run, it gives you more benefits than FD.
Some of the major advantages are shown below:

• Less tax: - Before investing mutual funds or any amount, everyone takes information about the tax on that investment. It is considered the right to invest in mutual funds because of higher profits due to lower taxes.
• Secure Investment: - Mutual funds operate under the supervision of SEBI and SEBI is a government body. Through SEBI, we can get information about daily stock prices, past performance of stocks, qualification of the manager of the fund.
• Risk reduction: - There is also a plan in the mutual fund in which the risk of risk is quite low. If it is compared to the share market, then the risk of funds of mutual funds is much less than the share market. Therefore, the capital of the mutual fund is more secure than that.
• Return: - Investment in Mutual Fund brings a good return. In the long run, you get far more benefits than an FD or savings account. If you want to invest money for 5 to 10 years then you must consider Mutual Fund.
• Management: - The biggest advantage of investing in mutual funds is that you do not need to have knowledge of the stock market. Because the mutual fund is managed by a professional manager.

Mutual Funds Deficit / Disadvantages

There are many benefits of investing in a mutual fund, on the other hand, these things have to be taken care of before a small loss.

• Just as there is no risk in the FD of a bank, it is not in the mutual fund, but there is a risk in investing in the stock market, which is much less than the risk.
• Most mutual funds have more income than FD but sometimes it can happen that not only less than FD can also go into losses. This is rarely seen. There is some income.
• If you want to make a better income in less time then it is not possible. For a good income in mutual funds, one has to invest money for a long time.

Our idea

There are two aspects to any work. If you want a good result or output, then the courage to lose something will have to be kept. That is, if you want more returns, you will have to take the same risk. In Suru, you can take a small amount of risk palan with a small amount.