Mutual funds are great investment instruments for people who wish to park their surplus money and make it grow. Investing in mutual funds does not require a deep understanding of the concept, having some basic knowledge is more than enough to start investing in mutual funds.
Mutual funds are investment instruments which club the investments from various investors and invests them in the stock market under a given scheme. These funds are managed by a special body called Asset Management Company (AMC).
The total pooled money is invested in different types of securities like debt funds, equity funds, bonds, etc. the funds are managed by an expert called Fund Manager as appointed by the AMC. A fund manager is responsible for managing the funds in accordance with the market corrections and creates wealth for the investors. An annual fee termed as Expense Ratio is charged from the investors against the services, they avail which is mainly managing their portfolio. The returns are generally in the form of capital appreciation or dividends. There is an option with the investors to either earn the gains as regular income or they can reinvest the returns back to the investment amount.
There are several reasons that support investments in mutual funds. They are easy, accessible and much more. Here are a few of them:
Mutual fund investing has become very convenient over the course of time. There is no need for paper-work or timing the market. Everything is online and super-fast. There are a lot of facilities with mutual fund investing like portfolio management, plan switch, etc. it takes just a few minutes to get going with your first investment and many more to come.
This is a great advantage when it comes to investing with mutual funds. You can start small, as low as Rs. 500 and increase the amount gradually as per convenience. SIP or systematic investment plan is a way of investing which allows investors to invest on a regular basis with a small amount of investment. Contradictory to lump sum investment, SIP allows investors to make a small contribution towards investment portfolio and create wealth
ELSS is Equity Linked Savings Schemes is an option offered by mutual funds which have benefits under the section 80C which allows investors to save taxes on investment up to Rs. 1,50,000. It requires a lock-in period of a minimum of three years.
The mutual funds are managed by experts called fund managers. These fund managers are supported by a team of financial researchers who maintain up-to-date information about market trends. The fund managers based on this data and his own experience manage your funds and makes the decision regarding selling or purchasing funds. The knowledge and skill set of fund managers goes beyond retail investors.
The mutual fund calculator calculates the final amount which will be received at the time of maturity by taking into consideration factors like total invested amount, tenure, expected rate of return, way of investment- SIP or Lump sum, frequency of SIP, etc.