In this post, you will be given information about mutual funds. You will know what are mutual funds. How Mutual Fund Works. Mutual funds have become a smart subject in today’s generation because investments can be made with even a small amount of 100 or 500, investing small money regularly can later turn into millions in the future, the reason for this is mutual funds. The fund has compound interest. A special feature of mutual funds is that even if you do not have enough knowledge of the stock market, it can be an accessible route. Let us know what a mutual fund is and how it can help you fulfill your dreams.
What is Mutual Fund? Meaning of mutual fund
Actually mutual fund is an English word which we call “mutual fund” in Hindi. If explained in simple language, mutual fund is formed by collecting from different people which is invested in different places and the effort is made to give you more profit than your deposited amount. Each mutual fund is supervised by a manager.
Who is this fund manager?
It is done by a professional person, in fact its job is to earn profit by putting your investment in the right place, this is called a professional fund manager. You do not have to worry about buying or selling shares, this responsibility is also theirs.
But why invest in mutual funds only?
1- Management- You can buy or sell in this on any day provided FD, PPF, and Insurance is on any government holiday or on Sunday you cannot buy or sell.
2 – There are many options – your entire money is not invested in only one place but in a few places.
3- There is transparency – it is operated by SBI, which tells you your net asset value every day, along with its complete information is also told to you at all times.
4- Low Fees- Expense Ratio is very low which you pay for managing your stock it is around 1.5-2.5% which is considered to be the lowest it is low because a lot of people invest money in it Due to which your fee gets divided a little bit among many people.
What is the risk factor? How to invest in Mutual Fund?
Mutual funds have been considered as a risk factor but if you invest money smartly then you can take full advantage of it.
1- Making the right choice- First of all you should decide why and for how much time you are investing. If you are doing short term for 2 years or longer interval, if short term is for 2 years then liquid or debt mutual funds are considered better and if you are doing long term 5 years 10 years or more Equity mutual fund is better for the year.
2- Risk taking – Sometimes for higher returns, you have to take more risk, not only on the return but also on the safety of the money you have invested like if you have invested in equity mutual fund then you have to pay so much Don’t take the risk that the value of your investment may fall. You balance both returns and investments.
3- Few years performance of the fund – It is not necessary that if it has performed well in the last few years then it will do well in future also. You see the consistency of what it has done in the past – how different its ups and downs are from the economics and you must look at the ratings given by the agency.
4- Be sure to add all the expenses- Entry fee, exit fee and especially the expense ratio must be seen because all these expenses reduce your profit a bit. Avoid it if you have to pay more than 1.5 expense ratio.
5- Before investing, find out the abcd of any company- like who has brought that company? Who manages that company? How has been his performance for the year so far? How is his reputation in the market? You can visit the website of any mutual fund company which is also called Asset Management Company. And after taking some time, you invest in it thoughtfully.
How to start investing in Mutual Funds
First of all do your KYC
To invest by giving your Aadhar card, PAN card or cancel check to the mutual fund company, you will have to register by visiting its website, the employee will come home and take the documents or there is another way online, many apps have come for this from where you can. You can also register yourself very easily from mobile
1. Download the Mutual Fund App.
2. You register on it.
3. Verify KYC after registration.
4. Now invest money in any company wisely.