Basics of Mutual Funds
March 26th, 2009
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 don’t have enough risk appetite for the investments you want to make? What if you don’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
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
Categories: Mutual Funds, Trading Basics, Your Money
very nice article…good for beginners like me
Nice …Multual funnds expalined in layman’s launguage…
w8ing for next details on mutual fund to be published
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 ???
I am looking forward to see such basic article that creates turns-on towards finance and saving
I like your article so much.Keep writing like this which enhance the knowledge of beginners like us.Waiting for second one.
this article is very fruitful for me,and i get to knew about mutual fund basics.
this article is good for beginners like us and looking forward for your next article on mutual fund
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.
Renuka you have done an awesome job by adding this review and this article is very much beneficial to the beginners in this field…
Very useful for beginners..
Good approach towards MF.
Really nice and benficail explaination for beginners.
Go through it once .You will have an idea.
I GOT CLEAR STATEMENT OF MF..
Gave me a clear idea. Good job Renuka.
Very knowledgeable. i understood clearly
regards,
Amarjeet
this is an good article very useful to freshers
thanks ravikumar
Good for beginners… Thanks a lot
This is really a good article especially for the begginers, all bulky doubts has cleared related to mutual fund.
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……..?
only problem in mutual fund is we have to pay for atleast 3 yrs which is a long time.(but safe)
regards
makarand
it is very nice article for investement in share markets
it is very good article for fresher who giving interview in mutual fund company……….
makrand,
I agree with your statement but our money has been atleast in safe mode for a long tenure periods.
Regds,
Rohit.
Very good information on mutual funds.Thanks for writing this article in a very simple manner.
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.
Nice article for understanding financial terms
good sir
thanks
crap
Very Nice Article for beginners.. Thanks renuka..
quite good for beginnerslike me
really nice and very useful for me
goog job
i want playing share market how do help hdfc
Excellent Article