Managed by a professional fund advisor, mutual fund allows the investors to pool their money into a diversified selection of funds. Mutual fund offers array of investment options namely fixed maturity plans, exchange-traded funds, sectoral funds, and much more.
Let's glance at some benefits you can avail from investing in MFs
Your money can beat inflation as MF generates inflation-adjusted returns. It is an ideal choice to park your savings in MF for a long term inflation adjusted growth
Your money is in safe hands as MFs are handled by experienced financial advisors. They handle all financial decisions based on the performance and prevailing market condition
MF investment offers you the convenience of the ability to sell or buy them on any business day. It offers multitude of choices based on your goals, objectives & risk appetite
Investing in MFs are relatively inexpensive, you can begin with just Rs.500 and enjoy the benefits of long term equity investment
MFs help mitigate risks to greater extent as your investment portfolio is spread across a diverse range of assets
MFs offer liquidity i.e. you can get your money back quickly. Based on medium or long term investments, your investments have potential of giving you higher returns
Investments in MF are regulated by SEBI and your fund managers provide regular updates on how your investments are performing along with the strategy & outlook
How It Works?
A Quick Walk-Through As To How Mutual Fund Really Does Works:
The money collected in the pool is then invested in stocks, bonds, money market instruments related to the fund's investment objectives
Your choice of investing depends upon your financial goals & aptitude for risk. Your Financial Advisor will guide you in arriving at a conclusion
You can invest in either Equity & Debt MFs
An equity fund is a MF that invests in stock
Debt MFs invest in fixed income securities like corporate bonds, money market instruments, treasury bills, Government securities
The most prevalent type of MFs operate on open-ended basis, which means its continuously sells shares to new & existing shareholders or buys back from shareholders who are selling
Close-Ended funds operates for a fixed duration & has fixed number of shares outstanding
Funds in close-ended can be subscribed or redeemed only during a specified duration
Net asset value NAV represents the market value of each unit of a fund or the price at which investors can buy or sell units
MFs are traded on the basis of their NAV (Net Asset Value). Unlike stock price, which changes through out the day, MF NAV are updated at the end of each trading day
What Is SIP
SIP is a smart & hassle free way of investing in mutual funds.It is a planned approach towards investing & inculcates a habit of savings regularly
SIPs are the way through which you can generate wealth & build a path towards achieving your financial goals
It allows a pre-determined amount to be auto debited from your bank account & invested in a mutual fund scheme of your choice
The amount is debited at a regular intervals that can be either weekly, monthly or quarterly
Once your money is invested, you are allotted a certain number of units which are based on the current market rate or known as NAV (Net Asset Value)
What is NAV you wonder; NAV is the per-unit value or per-unit price of a particular mutual fund scheme
So every-time your money is invested through SIP method, additional units of the chosen scheme are purchased at their current rate & added to your portfolio
SIPs method of investing has many benefits to it like it factors in disciplined saving habit, allows flexibility, long term gains & convenience
What Are Corporate Deposits?
These types of deposits are offered by corporate companies
Generally, banks are the issuers of fixed deposits services or products in India
But there are other non banking intuitions that offer similar deposit products to investors. These corporate entities could be involved in various businesses & may require capital to fund their operations
In such scenario, they issue deposit certificates to the investors of different tenures at fixed interest rates
These types of deposits offer high interest rates than the ones offered by banking institutions. Hence, investors prefer include corporate deposits in their deposit portfolio
A well chosen corporate deposit scheme will yield great returns for an investor
Though these type of deposits offer higher interest rates, there is also a slightly higher risk associated with them. One must factor the credit risk of a company before investing
