Basics of Mutual Funds


Basics of Mutual Funds

Money is merely a piece of paper until you realise the importance of saving and making it grow spirally. There is plethora of investment avenues available at present, but what suits your objective is the one you should opt for. On a broader picture, a common man can think of two options, either invest in shares offering glamorous returns with an associated unknown risk or invest in the regular income debt options offering lesser but safer returns.

Now the question arises: Is there a way in middle so that you get good returns like equity and safety of investment like fixed income options. Yes, a Mutual fund is what you should look for.

Why Mutual funds?

What if you are a novice in the world of stock markets but still want to invest? What if you donโ€™t have enough risk appetite for the investments you want to make? What if you donโ€™t have time and skill to manage your portfolio and want some professionally qualified people to invest on your behalf? What if you are a novice in the world of stock markets but still want to invest?

What are Mutual funds?

As implicit by name, mutual fund is a fund mutually held by the investors who are the beneficiaries of the fund. It is a type of Investment Company which collects money from so many investors in common pool and then invests this capital raised in variety of options like bonds, equity, gold, real estate etc. At the core of it are professionally qualified people called fund managers analysing the markets conditions and making investment decisions with an objective of maximization of profit. Substantially all the earnings of a MF are passed on to the investors in proportion to their investments. In lieu of the services offered, the mutual fund also charges some fees from the investors. The diagram below clearly indicates that investors invest in mutual fund that further makes investment in various options.

Mutual Funds Basics

Mutual Funds Basics

Having been through basics, one can infer that investing in mutual funds is an easy way of playing safe in equity especially you being unaware of tactics of stock markets because it provides professional expertise of fund managers who make investment decisions based on constant study and market research. Besides this, it offers benefits like diversification of portfolio. Since mutual fund is a collective investment vehicle, they have an option to invest in different sectors of market like retail, real estate in addition to options like debt and commodities market. This reduces the risks to which an individual investor would have been exposed if a particular sector is in period of downfall. The simplicity of investment and various benefits offered have made them so popular that can be seen from their growth in past. They came into picture in 1963 with 67bn assets under management (AUM) compared to current figures of 4609.49bn with total of 35 mutual funds available at present and still expected to grow in years to come.

Renuka Kinger


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47 Responses to “Basics of Mutual Funds”

  1. Abhishek says:

    very nice article…good for beginners like me ๐Ÿ™‚

  2. Prajakta says:

    Nice …Multual funnds expalined in layman’s launguage…
    w8ing for next details on mutual fund to be published

  3. Kuldeep says:

    Renuka has simply added a suppliment to “Rich Dad Poor Dad ” Thru her comperhensive doc., A Nice way to get out of the Rat Race isnt it ???

  4. Golu says:

    I am looking forward to see such basic article that creates turns-on towards finance and saving

  5. Madhuri says:

    I like your article so much.Keep writing like this which enhance the knowledge of beginners like us.Waiting for second one. ๐Ÿ™‚

  6. MOHIT KUMBHAT says:

    this article is very fruitful for me,and i get to knew about mutual fund basics.

  7. Navneet says:

    this article is good for beginners like us and looking forward for your next article on mutual fund

  8. Sandesh says:

    Awesome article wrote and well explained. Hope you post more and more such articles which will help us to understand market and finance in better manner. Hope next article will be published soon. Waiting for your next article.

  9. mohini rohilla says:

    Renuka you have done an awesome job by adding this review and this article is very much beneficial to the beginners in this field…

  10. Anand S says:

    Very useful for beginners..

  11. Yashwant says:

    Good approach towards MF.

    Really nice and benficail explaination for beginners.

    Go through it once .You will have an idea.

  12. RAJU..... says:


  13. bhanu kiran reddy says:

    Gave me a clear idea. Good job Renuka.

  14. Amarjeet says:

    Very knowledgeable. i understood clearly


  15. ravi says:

    this is an good article very useful to freshers
    thanks ravikumar

  16. NAADHAN says:

    Good for beginners… Thanks a lot ๐Ÿ™‚

  17. Rohit Lilhore says:

    This is really a good article especially for the begginers, all bulky doubts has cleared related to mutual fund.

  18. SWATHI says:

    does the Fund Managers invest the funds in the equities which we require thm to invest, or do they do it on their own. What is the Entry and the exit loads int eh mutual funds. Is it the rate charged by the fund managers or the cost of investing……..?

  19. only problem in mutual fund is we have to pay for atleast 3 yrs which is a long time.(but safe)


  20. it is very nice article for investement in share markets

  21. sumit says:

    it is very good article for fresher who giving interview in mutual fund company……….

  22. Rohit Lilhore says:

    I agree with your statement but our money has been atleast in safe mode for a long tenure periods.


  23. Shashi says:

    Very good information on mutual funds.Thanks for writing this article in a very simple manner.

  24. vijju says:

    hi friends this mutual funds is good deal to all the people
    who want to invest the money to get something in return
    i really support this type of fund.
    By observing this information i got some knowledge reagarding this fund.this is information is very much to all the people.

  25. mahesh Kudumu says:

    Nice article for understanding financial terms

  26. hariharan says:


  27. Chander says:

    Very Nice Article for beginners.. Thanks renuka..

  28. bharat says:

    quite good for beginnerslike me

  29. nisha says:

    really nice and very useful for me

  30. ashish says:

    goog job

  31. virendra says:

    i want playing share market how do help hdfc

  32. Vaidan Srinivas says:

    Excellent Article

  33. aruna says:

    gud job done!!!!

  34. dimple says:

    very impressive article for begniers ,very good going ,keep it up.

  35. Neelendra says:

    This article is very good to initially investment in mutual funds.

  36. prachi says:

    vry gud article in easy language and easy to understand

  37. Beena Yadav says:

    Nice articles on mutual fund.

  38. JEEVAN says:

    Very nice article.

    Wish you good luck Renuka.

  39. Swati says:

    Hi Renuka you have explained about mutual funds very nicely…………..Thanks

  40. ARMAAN SHARMA says:

    V nice article,thanks for given such great infomation on mutual funds,but I want to know HOW TO INVEST IN MUTUAL FUNDS n WHICH IS SAFER n PROFITABLE,

  41. Rathod D B says:

    its a good article for beginners like me. this article really fruitful. so thanx Renuka looking for second one…

  42. Manohar K K says:

    very good information for the beginners

  43. rahaman says:

    very nice article for the beginners for taking right investment decisions for their money. so thank you very much renuka kinger .

  44. Dhanesh says:

    Pretty good. Now I am in a position to explain what is Mutual funds….looking forward for more topics like this…ty!!!

  45. Deshmukh Satish says:

    Very nice explined.Useful for beginner..

  46. pallavi says:

    in case of mutual funds,is everything in the control of fund manager??can a novice investor monitor the current value of gold/share/stock etc..will everything be open to the investor?are returns guaranteed?

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