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Mutual Fund: What is a mutual fund? Learn in detail

Mutual Fund is a good and popular option of investment. Lot many times you may have heard about Mutual Funds from TV ads as well as from many people and you may have wondered what is Mutual Fund? How does a mutual fund work? So today we will answer all the necessary questions related to mutual funds.

Mutual fund investments

Mutual funds are seen as an alternative to collective investment. Mutual fund investing means when a lot of people deposit a small amount of money to a management company to invest in shares. Mutual fund companies raise money from investors. This money is then invested in shares. In return, mutual fund companies also charge a fee from investors. 

A lot of investors invest in Mutual Funds. A manager is appointed to manage this money properly. This appointed manager is an expert in the field of investment. This manager tries to get the maximum profit to the investors by investing the money in shares or bonds. The manager is working towards making a maximum profit by taking a minimum risk. 

History of Mutual Fund 

The Mutual Fund was started in 1963 with the help of the Reserve Bank of India and the Government. Its main purpose was to attract small and large investors.

How exactly does a mutual fund work?

If a person wants to invest in stocks, but he/she do not have the right information about stocks, then the person can invest through mutual funds. Manage funds through a fixed fee. 

What is the difference between Shares and Mutual Fund?

Investing in a mutual fund is different from investing in shares. To invest in shares, one has to buy shares of a company, but investing in one unit of a mutual fund is a part of investing in many different shares.

A great investment option

Mutual funds provide investors with the right means of investment to provide better returns with less risk. There is a positive outlook for the economy and the market in the coming period. The governments around the world have taken the right steps to boost their economies, the global economy is likely to pick up. 

Invest every month

If you can’t invest money at one time, you may want to invest a small amount of your salary each month. A systematic investment plan (SIP) is one such option. Investing through SIPs gives you relief from risk. Investing in SIPs should continue when the stock market is down. Because in such a situation you can invest less money.

The advantage of investing at a lower level 

When you invest at a lower level, the stock market makes a good profit. This is what mutual funds do. They manage your funds in a specific way and you benefit from it. If you want to be an investor and do not want to invest directly in equities, you can follow the path of mutual funds.

Many investment options

Investing directly in the stock market can be risky. So you should consult a good advisor and make a decision. Despite financial uncertainty and stock market volatility, investors have trusted the equity mutual funds. You can invest in small-cap, mid-cap or multi-cap mutual funds.