Irrespective of you being an old or new investor, you must have surely stumbled across the term mutual fund investments. You must have been advised by your friends or financial advisor to invest your capital in mutual funds to achieve your financial goals. These goals could be anything from planning a trip to funding for your child’s education to buying a house or car to saving for your retirement. But, what is a mutual fund? And how does it work to fulfil your financial goals. In this article, we will throw light on these two topics.
What is a mutual fund?
A mutual fund is an investment vehicle that pools the money of several investors to invest in a wide variety of securities such as equities, debt, money market instruments, cash and cash equivalents, gold, etc. These investment vehicles are professionally managed by a mutual fund expert called as fund manager who holds exceptional knowledge and expertise to invest in the markets. These fund managers along with a team of analysts and researchers are constantly on the lookout of the right types of investment for an individual that will help them meet their financial goals.
Types of mutual funds
Mutual funds are further bifurcated into various categories basis different criteria. Basis a fund’s maturity period, mutual fund investments are broadly classified into two categories – open-ended mutual funds and close-ended mutual funds. Basis the investment objective of a fund, mutual funds are broadly classified into three categories, namely, debt funds, hybrid funds, and equity funds. Additionally, equity funds, debt funds, and hybrid funds are further bifurcated basis their market-cap size, the sectors they invest in, etc. As you can see, there are different types of mutual funds available at your disposal to help you meet your financial objectives. Basis your financial goals, investment duration, and risk profile, you can choose the right types of mutual funds that will align with your investment portfolio.
How to invest in mutual funds?
Investing in mutual funds is a seamless process. An investor can invest in mutual funds either through the regular and disciplined approach of SIP or systematic investment plans or a one-time approach of lumpsum investment. Before you start your journey with mutual fund investments, you must find the right fund house or AMC you wish to be associated with. Finding an apt mutual fund house is as important as finding the right type of mutual fund for your investment portfolio. You can either invest in mutual funds by physically visiting the branch offices of your AMC or fund house, or you can invest in mutual funds online through the website or app of the AMC, or directly through the mutual fund’s website, or through a third-party agent. If you are unsure about any step in your investment journey, you can always take the services of a mutual fund expert who can takes these investment decisions on your behalf. Happy investing!
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.