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Mutual Funds: What is Mutua Fund, How to invest in Mutual Funds, Benefits of Mutual Funds

What are Mutual Funds?

Now let's talk about Mutual Funds. As you know, investing in the stock market requires a lot of time, knowledge, and capital. Now it takes time for big investors to keep an eye on the ups and downs of the stock market, but there are many small investors who are short of time and capital.
Mutual funds are a type of indirect investment in stocks and bonds.
    A mutual fund is a type of institution or trust that issues its own units (like shares) in which the buyers of the mutual fund are investing. The amount invested in mutual funds is invested by the professional managers of the mutual fund based on their knowledge. Experience, understanding, and analysis of different types of stocks and other securities. 

    The advantage of mutual fund investing is that the professional fund managers of mutual funds are based on their knowledge trying to invest all the accumulated wealth in the best possible way, in return for which they charge some fees.
    Mutual funds

    Mutual fund investment is beneficial for those people who do not have much knowledge of the stock market or do not have enough time to go through the complete information before investing in stocks, so they can invest in mutual funds and mutual funds in mutual funds. are. Efficiency wise further stock market av is in the investment of other securities.

    The dividend received by mutual funds is divided on the basis of units purchased by them in the investment.

    For example, suppose you and five of your friends have Rs 50,000 (per person) that you want to invest in the stock market, but you have no idea about the troubles of the stock market, nor do you have an investment. enough time to do so. Share Market Take time off from the business/job to keep an eye on this investment. So what are your options:

    You hold an identified person who invests in the stock market.

    Give money to an institution investing in the stock market on your behalf.

    You all invest your money in one place and put the responsibility of taking care of the investment on someone who knows about it.

    Now suppose you are not five but 5000 people, then you have the option of mutual funds only. In this, you give your investment to the Mutual Fund Management company. Your money is handled by professional fund managers who understand the nuances of the stock market. In return, these mutual fund companies keep an eye on these mutual fund companies through their policies. In this process, mutual fund companies come up with a variety of schemes, each dividing the capital invested in the scheme into small, equal parts (like shares). Investors are entitled to their shares called units. In this way, small investors can also participate indirectly in the stock market.

    Know your investment needs

    How to invest in Mutual Funds

    Your financial goals may vary as per your age, lifestyle, financial independence, family responsibilities, income and expenditure level etc., so check your requirements first.

    1. What are my investment objectives and requirements?
    2. How much risk should I take?
    3. What are my cash needs?

    By going through such a process, you will know exactly what you need from your investments and you will be able to adopt a healthy mutual fund investment strategy.

    Choose the right mutual fund

    You should choose mutual funds only after you have a clear investment strategy in your mind. The proposal document of the scheme can give you an idea of ​​the scheme objectives and other supporting information such as the performance of the scheme so far. Before investing in any mutual fund, keep the following points in mind.

    How has this mutual fund performed over the years as compared to other funds in the same category? For this, you can see the details of its indices.

    How well organized Mutual Fund is to give you efficient, quick, and personalized services.

    Based on the interaction with mutual funds, see how much transparency there is in it.

    Choose the ideal mix of plans.

    It may also happen that investing in just one mutual fund scheme may not cover all your investment needs. So you should consider a good mix of plans to achieve your specific goals.

    Invest regularly.

    The best concept to invest for most investors is to invest a fixed amount at short intervals like on a monthly basis. By investing a certain amount every month, you get a few units when the value is high and you get more units when the value is low. This way your average cost per unit is reduced. This is called rupee-cost averaging. It is considered to be a disciplined investment strategy that is followed by investors all over the world. 

    The options are wide open in this investment plan providing a well-planned investment. Hence this is the best regular investment plan for you. You can also invest in mutual funds through SIP. With a regular SIP (Systematic Investment Plan), you can invest even during the ups and downs of the market.

    Don't delay investing.

    Start investing as early as possible and have a regular investment plan. If you start investing now instead of stopping, you can earn a lot of income. The compounding rate gives you the opportunity to earn a return on income and your investment also keeps growing at the same compounding rate.

    Take care of tax savings.

    As per the extant tax rules, dividend/income distribution by a mutual fund is exempt from income tax as long as it is not in the hands of the investor. But in the case of debt schemes, a dividend distribution tax is applicable on dividend/income distribution. 
    There are many other benefits of investing in mutual funds under various provisions of the existing tax rules. Therefore, you should consult your tax advisor or chartered accountant to earn maximum income by investing in mutual funds.

    Your Rights as a Mutual Fund Unitholder

    As a unitholder in a mutual fund scheme under SEBI (Mutual Fund Regulation), you have the following rights:

    You have the right to obtain a certificate in your name or your account statement within 30 days from the date of closure of subscription in the Open Option Scheme or within 6 weeks from the date of receipt of an application for a Unit Certificate from the Mutual Fund.

    Right to information about investment policies, investment objectives, financial position, and simple facts related to the scheme

    Right to receive dividend within a period of 30 days from the date of declaration of dividend and to be notified within 10 days after the date of repurchase or payment.

    invest in Mutual Funds

    Ten Benefits of Mutual Funds

    1. professional management
    2. Diversity
    3. convenient administration
    4. income potential
    5. Less cost
    6. liquidity
    7. transparency
    8. elasticity
    9. desired plan
    10. efficient regulation

    How many types of mutual funds are there in our country?

    1. Equity mutual fund.

    2. Debt mutual fund.

    3. Hybrid Mutual Fund.

    4. Solution-oriented mutual fund.

    if you want to invest in Mutual Funds through Mobile App. We suggest Groww  App.

    Topics about the stock market that every investor should know.

     What is Market Capitalization and Company size?

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