What is a mutual fund ?
Mutual fund is a group of Stocks or bonds, which is managed by a professional wealth manager, they help investors with managing types of stock and proper plan with divided ratios for the fund.
It is beneficial for the investor who invests paycheck to paycheck, as well as for a person who wants to invest big amount at once . Total invested amount keeps increasing on monthly/quarterly basis with SIP as investment method and will be more profitable as compared to Stocks purchasing as any stock added in mutual fund will be already analysed by Fund manager. so there will be less risks involved as compared to stocks purchase.
Types of Mutual funds:
How many types of Mutual funds are available ? Several type of Mutual funds are available.
- Debut Mutual fund(Liquid Mutual Fund)
This Mutual fund is very secure type of investment. It provides return more than or equal to Fixed Deposits in banks. This mutual fund basically invests in government security bonds. treasury bills and corporate bonds etc.
– One positive point about this mutual fund is it is not affected by Stock market even market fails.
– Another positive point about debt fund is Lock in period only 7 days or in other words invested amount can be fully withdrawn after 7 days from the day money invested.
– Debt fund provides benefit over FD, that money can be withdrawn any day and there will be no loss of earned interest meanwhile if one wants to break premature FD, he has to pay penalty resulting in loosing earned interest.
2. Flexi Cap Mutual Fund
This Mutual fund is newly initiated fund. This is combined set of stable Small cap funds as well as best MID Cap and Large Cap Fund.
– This type of fund gives good return as compared to Index fund and more and less riskier than small cap funds.
3. Index Fund
Index funds are known as stable funds as they provide stable returns over the years. This type of fund cnosists mainly index as name suggests such as NIFTY50, BankNifty, ITNIFTY etc.
4. Small Cap Funds
Small cap funds as name suggests invests in Small cap stocks, but here good part is with proper research. These cap funds provide good return overtime. But this type of Mutual fund is very risky as compared to other mutual funds.
5. ELSS Funds
This type of fund provides stable returns, investments in this mutual fund has one condition like money can not be withdrawn before three years.(Three years lockin period). Another benefit of this Fund is, Investment done in this fund will be eligible for tax exemption under section 80-C in Old tax regime.