Mutual Funds are a type of investment that has quite recently gained popularity, particularly in India. In a layman’s language, mutual funds are an investment plan that is a pool of equities, bonds and other securities that are open for participation for the like minded investors. Each investor in this plan shares the surplus and/ or the deficiency of the fund.
The Net Asset Value or NAV of the funds keeps changing every day and is hence estimated on a daily basis. This investment plan not only balances out the risks involved but also widens the arena. On the basis of period of maturity, Mutual Funds can be categorised in the following types:
Open-Ended: Open-ended funds are known for their ability to generate high liquidity for the investors. This type of funds can be issued and redeemed at the convenience of the investor and are valued as per the daily NAV.
Closed-Ended: The availability of this the Closed-ended funds for purchase open on the release of New Fund Offer or NFO. These funds only liquefy after the completion of their maturity period. The investors can immediately liquify these type of funds via sale-purchase at the exchange where they are enlisted.
Benefits of Mutual Funds
Let us take a look at some of the major benefits that Mutual funds have on offer for the investors!
Diversification of risk: Investing in mutual funds diversifies the risk of the investor. If an investor has a small amount of money to invest, then investing on individual stocks or bonds would be more riskier than investing in mutual funds.
Promoting liquidity: Both open-ended funds and closed ended funds generate liquidity in the market. However, the period of time in each of the cases might differ.
Investments on a small scale: Mutual funds promote investments on a varied scale ranging from the lowest amount possible to the highest that an individual can spare. Hence, this is the best choice for those who have a small amount and the will to invest.
Transparency in participation: These types of investments are very much transparent in their functioning as the experts provide the investors with multiple schemes and choices before investment. This helps the investor be the incharge of his/her plan and participation.
Expert management of funds: These type of funds are always managed by experts who conduct proper research before moving ahead with the investment. They try to make the best possible choice for your money so that your earn the best results.
Mutual Funds in India
Mutual funds investment in India can be done through the following channels:
Though Systematic Investment Plan: Systematic Investment Plans or SIPs are the best way to invest in mutual funds in India. Through this method, an individual can conveniently make investments on a regular basis. The amount required for this plan can be as per the convenience and capacity of the investor. Systematic Investment Plans hold the capacity to give good returns in the longer run and do not require a large amount of money to be invested.
Based on ability to take risk: Depending upon the ability to take risk of the investor, an individual can chooses his/her pick of mutual funds. Those who prefer a high-risk investment can go for equity funds, those who prefer a moderate level of risk can go for hybrid funds and those who like to prefer the slow and gradual road can go for investments related to debts.
Based on various categories of funds: The performance and the time required by the funds differ for the large-cap, small-cap and mid-cap funds. The investor is free to choose amongst these or make a suitable combination using all of them to design the apt investment plan for his/her financial goals.
Based on different sectors: Investment can also be planned according to the sectors. An individual can plan his/her participation in a particular sector if he/she can sense that the sector would outperform in the near future. Such prudent approach can lead to good results.
Based on one’s financial goals: On the basis of your financial goals, you can choose your plans and plan your participation in mutual funds. The plan and participation might vary for different people with different goals leading to an availability of an option for everyone.
Mutual Funds Sahi Hai
‘Mutual Funds Sahi Hai’ is a media and communication campaign launched by the Association of Mutual Funds in India, also known as AMFI. This campaign is directed to increase awareness amongst investors about investment in mutual funds. The campaign aims at increasing participation in mutual funds in India and increase awareness about it amongst the potential investors. As the name of the campaign conveys, its purpose is to convince the potential and existing investors to trust and invest in mutual funds so as to increase their returns and reach their financial goals conveniently.
The man behind the launch of ‘Mutual Funds Sahi Hai’ is G. Mahalingam, who is a member of SEBI, who believes that this has occurred for the very first time in the history of financial services that the whole community has joined hands to push forward the category. This campaign will not only invite more investors but will also clear out the myths and doubts that are holding back the common people from investing.
Mutual Funds Calculator
Mutual Funds calculators can be categorised on the basis of:
- Returns
- Ranking
- SIP Returns
- Tax Savings
- Monthly Needs
- Retirement Needs
- Child’s Education
- Child’s Marriage and so on.
No comments:
Post a Comment