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MUTUAL FUND
What is Mutual Fund
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).
How its works?
A mutual fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. For an individual investor, having a diversified portfolio is difficult. Mutual funds helps the individual investors to invest in equity and debt securities simultaneously. When investors invest a particular amount in mutual funds, he becomes the unit holder of corresponding units. In turn, mutual funds invest unit holders’ money in stocks, bonds or other securities that earn interest or dividend. This money is distributed to the unit holders. If the fund gets money by selling some stocks at higher price the unit holders are liable to get the capital gains.
Benfits of Mutual Fund ?
Professional Management: The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor the investments.
Diversification: By owning “shares”(known as “units”) in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you. Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn’t be possible for a small investor to build this kind of portfolio with a small amount of money.
Economies of Scale: Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.
Liquidity: Just like an individual stock, a mutual fund allows you to sell the units at any time.
Simplicity: Buying a mutual fund is easy! The minimum investment is also very small. As little as Rs 500 can be invested on a monthly basis. Just contact us to know more.
What is SIP?
SIP allows investor to choose the mode of investment as per their convenience- monthly, quarterly or annually, for investing in funds of their choice. Investors can choose from various investment vehicles to invest their money including stocks, mutual funds, ETFs, etc.
SIP brings about a discipline in terms of investment habits. It helps the investor in maintaining a focused and dedicated approach towards investment. Starting with an amount as low as Rs.500-Rs.1000 per month, SIP offers a number benefits that make investment quite comfortable and enjoyable experience.
Why to invest via SIP?
- As said above, SIPs are the best way to build a corpus, here let us glance as to why must one do so:
- It is light on your wallet. Since you can begin with amount as low as Rs.500, you can easily manage your investments and other expenses efficiently
- There is no much effort. A certain amount gets auto-debited from your account and invested into a specific mutual fund scheme
- The investment remains the same only the number of units bought/sold fluctuates as per prevailing market conditions
- More number of units can be purchased in a declining market and less number of units in a rising market
- Once an investor opts for SIP option, he/she automatically participates in the market swings
All Mutual Fund AMC
