Basic Concept of Mutual Fund

Hello Friends, 

My this blog is related to tell you about the Basic Concept of Mutual Fund.

"A mutual fund holds a variety of investments which can make it easier for investors to diversify than through ownership of individual stocks or bonds. When you buy a mutual fund, your money is combined with the money from other investors, and allows you to buy part of a pool of investments."

Mutual funds are regulated primarily by Securities and Exchange Board of India (SEBI). In order to provide a guaranteed returns scheme, mutual fund needs to take approval from RBI. The Ministry of Finance acts as supervisor of RBI and SEBI and appellate authority under SEBI regulations.

Mutual funds can be used to meet a variety of financial goals. For example:

• A young investor with a stable income and many years to invest may feel comfortable taking more risk to achieve greater potential return. They may invest in an Equity fund (High Risk).

• A mid-career investor trying to balance risk and return more moderately could invest in a balanced mutual fund (Moderate Risk) that buy a mix of stocks and bonds.

• An investor approaching retirement might be less comfortable with risk and more interested in fixed income investments. They may invest in a bond fund (Lower Risk).

 "The minimum amount to invest in mutual funds in India is Rs 100 in SIP & Rs 1000 in a lump sum."

Now you can invest just Rs 100 in some mutual fund schemes. In a bid to attract more investors, various domestic mutual funds have slashed the minimum lump sum investment amount in a scheme to Rs. 100. Earlier, most Mutual Fund schemes required investors to put in at least Rs 500 & Rs 5,000 as lump sum.

There are some advantages and disadvantages of Mutual Fund Invesments like:

Advantages of Mutual Funds

• Advanced Portfolio Management
• Dividend Reinvestment
• Risk Reduction (Safety)
• Convenience and Fair Pricing
• Easy to buy and sell
• A wide range of funds to choose from

Disadvantages of Mutual Funds

• High Expense Ratios and Sales Charges
• Tax Inefficiency
• Management Abuses
• Poor Trade Execution

I hope it will be helpful to you.

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA(Finance)

9871580806,8826566751

rightsteptoinvest@gmail.com