What is mutual funds ? — Types of mutual funds — Benefits of Mutual fund
What is mutual funds ? — Types of mutual funds — Benefits of Mutual fund
In this article, I will educate you regarding Mutual funds.What is mutual fund? How to invest in it ? Basically all the necessary information regarding it,being a common man or a beginner investor, all the information you will get in this Article.
Read more : how to make money online without investment
What is mutual funds ?
Explanation of what is Mutual fund mutual funds us a special kind of investment through which you can invest on different types together.
You can do a diversifies mutual investment by investing at one place. Asst management company starts mutual funds. Basically you give your money to asset management company and many people like you do so.
That company invest all the money collectively at different places. Out of some small percent of 1–2% is kept as a profit by asset compyand rest you get back as per that return rate.
HDFC, HSBC, ICICI, Aditya Birla, Reliance, Tata, these are the few examples of companies and bank who started their own assest management company. All the companies starts different kinds of mutual funds in large numbers.
For example ICICI has started more than 1200 mutual funds. So how risky is you mutual funds and what is the return depends on the mutual funds that you are investing in.
Mutual funds can give the return rate of 4% and also of more than 30% too. It can be of zero risk and also if high risk to. Because all this depends on where the asset management investing your Money.
If that company is investing on stocks then it will be more risky and you will get more returns. And if it’s investing in government bonds then it will be less risky.
Types of mutual funds.
Different types of mutual funds depends on the basis of investment done by AMC people.
We can divide this in the 3 categories: Equity mutual funds, debt mutual funds and hybrid mutual funds. These are some types of mutual funds
Friends , every month when you’re salary is credited then you keep some part of that salary as savings. You keep some money for your later use, maybe for emergency or if you want to be house, or car and you save for that.
There are lot of ways to save money. One of simple way is that you keep your salary as it is in the bank and it gets collected. But it is very bad way, because such a money loses their Money.
Inflation is increasing in our country and due to that the price of the commodities are increasing to. So the value of your money keeps decreasing every year by 4–5% according to the inflation rate.
People invest the money so that they don’t lose their value kept just lying. There are different places to invest. Our country has mainly 4 places for investment.
1 Saving account
2 Fixed deposit
3 Gold
4 Real estate ( people buy properties )
Some people who wants to take more risk also invest in stock market which is another way to invest your money.
Every investment has 3 thing , Return,risk and time .
Return means how much percent of profit are you earning through the investment. This is normally seen in percentage.
If our inflation rate is 4% then you should see that your profit return is more atleast 4%. Otherwise there is no point of investment if you have put your money and the value didn’t increase. Because the inflation rate is also increasing.
So the basic risk here is that if the time is more , risk is more then the return will also be more.
Saving account
Saving account has the minimum risk and there is no restrictions too. You can save or take the money out at any time.
But return we get us also very less, only 4% whereas our inflation rate in the last few years have been 4–5%
Fixed deposit
Fixed deposit is also a less risky options are but it has a time limit before that you or me can’t take money out. Hence the return is also a bit more, some what 7–8%
Gold and jewellery these days have a significant risk, Thier price fluctuate a lot. If you are going to see this history then you will know that until 2012 price were was consistently increasing. If you would have invested prioyto 2012 then you would have a got a good rate.
Real estate and property
Investment in the properties and real investment has low to moderate risk. You can see the India’s housing prices in the last few years. It has come up and down a lot.
Once of the disadvantages in investing in housing is that it needs a lot of. Capital, you need to have Lacs and crore of rupees to invest so this is disadvantage.
Stock market
You might have heard stock market, you can get a lot of return here but also loss. This is risk of investing in stock market depends on the stock where you are investing.
You need to have good knowledge of the performance of the stock and how does the stock market work basically.
You should not investing here if you don’t have good knowledge.
Thanks for reading this article.
Originally published at https://www.smartime.xyz.