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Saturday, July 10, 2021

What is a mutual fund? || WHAT IS MUTUAL FUND AND HOW TO EARN SAFELY FROM IT || મ્યુચ્યુઅલ ફંડ શું છે?

 What is a mutual fund?

For many, mutual funds are complex or scary. We are trying to make it easy and clear for you at a very basic level. Money deposited from a large number of people (or investors) forms mutual funds. The fund is managed by a professional fund manager.

This is a trust that raises money from many investors with a general investment objective. It then invests in equities, bonds, money market instruments and / or other securities. Each investor has units, which represent the holding of the fund. After deducting certain expenses by calculating the net asset value or NAV of the scheme, the income / profit from this accumulated investment is distributed evenly among the investors. Simply put, mutual funds are one of the most viable investment options for the average person, as they offer the opportunity to invest in a basket of diversified, commercially managed securities at a relatively low cost.

When should I start investing in mutual funds?

There is a beautiful Chinese saying, “The best time to plant a tree was 20 years ago. The second best time is now. ” There is no reason why a person should delay his investment unless he has the money to invest. It will always be better to use mutual funds than to do it yourself.

Do mutual funds only invest in stocks?

When you imagine an amusement park, do you think of roller-coasters or toy trains? Probably a roller coaster. Usually these rides are the biggest attraction in such parks, which creates the impression of an amusement park. Mutual funds are also expected to invest only in stocks and are therefore risky.

What are the risk indicators in a mutual fund scheme?

You need to evaluate the hard earned money properly before choosing the right mutual fund scheme to invest your hard earned money. When investors choose the most efficient scheme in the category and category of the scheme from time to time, they ignore the risk indicators in these schemes.

Does a person need to have a bank account to invest in a mutual fund?

If you are wondering how to invest in a mutual fund, remember that it is mandatory to have an account, KYC / CKYC, PAN and Aadhar card in any bank.

How do mutual funds help manage risk?

Risk appears in many forms. For example, if you own shares of a company, there is price risk or market risk or company special risk. Only the shares of that company may fall or fall due to the above reasons or a combination of these reasons.

What are the documents related to the scheme? What information do these documents provide?

All mutual fund advertisements have a message: "Read all the documents related to the scheme carefully." What are these documents? There are 3 important documents: Key Information Memorandum (KIM), Scheme Information Document (SID) and Statement of Additional Information (SAI).

Do Banks Offer Mutual Funds?

Banks deal in savings and loans, while mutual funds are for investment. You save when you put your money in a savings account or in a fixed deposit, you invest when you put your money in mutual funds. Banking and mutual funds are two completely different businesses, requiring specialized workspace and organizational expertise.

What happens when the market breaks down midway through a long-term investment?

Mutual fund investors with long-term investments through SIPs are constantly worried about the market collapsing during this period. SIPs are well prepared to deal with some of the risks of mutual funds such as market time and volatility.

What is the correlation between risk and return?

Mutual funds often say, "The higher the risk, the higher the return." Is this true? If ‘risk’ is measured as the probability of capital loss or fluctuations and volatility in investment value, then asset classes such as equity are undoubtedly the most risky and money held in a bank savings account or government bond is naturally the least risky.

What happens when a mutual fund company closes / sells?

This is a serious matter for any existing investor to note when a mutual fund company closes or is sold. However, since mutual funds are regulated by SEBI, there is a procedure prescribed for such incidents.

So why does the disclaimer say that mutual funds are subject to market risks?

Mutual funds invest in securities and the nature of securities depends on the purpose of the scheme. For example, an equity or growth fund invests in a company's stock. Liquid funds invest in Certificates of Deposit and Commercial Paper.

What happens if you miss the SIP payment?

Many investors worry about losses if they cannot pay the SIP during the term of the mutual fund. This situation can be caused by a number of reasons, such as some financial difficulties or uncertainties about the income of the job or business. It is natural that under such circumstances you may not be able to continue your regular SIP payments.

What happens to a mutual fund investment after the investor dies?

Mutual fund schemes generally do not have a maturity date unless you have invested in close ended ELSS or other close ended schemes such as FMP. In case of SIP also there is a period for which investment has to be made regularly.

What are the benefits of investing in mutual funds?

Many of us are just nervous about managing our own investments. With the help of a professional fund management company, people are assigned various tasks based on their education, experience and skills. As an investor you can manage your finances on your own or with the help of a professional company. You can take the help of a professional

What are the risks involved in investing in mutual funds?

We have all heard this: "Investing in mutual funds is subject to market risks." Ever wondered what these risks are? The image on the left discusses the various dangers.

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