MUTUAL FUND INVESTING (PART-5)

 In this post I am going to tell you about mutual fund investing.

WHAT IS MUTUAL FUND?

When Assets Management Company (AMC) starts a fund in which people invest their amount or when AMC pools money and this fund is manages and runs by a manager, this is known as Mutual Fund. AMC charges a small rate of interest from the investor which is it's income source.

NAV is the units of mutual fund. NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on a given date.

If NAV is higher it is good.

TYPES OF MUTUAL FUND

• Equity Fund- 

1. Large MID cap funds—> Equity funds which invest large proportion of it's assets under AUM. TOP 100 companies of India are come under this equity fund. I personally recommend to you to not invest in large cap funds although you have less risk in it. You can invest in NIFTY 50 instead of large cap funds.

2. MID cap funds—> Company having market capitalisation more than 5000 crores but less than 20,000 crores. Companies in India form 101 onwards till 250 are MID cap funds. If you invest for 3-5 yrs it is good.

3. Small cap funds—> In India, companies having market capitalisation less than 5000 crores are small cap funds. If you want to invest more than 5 yrs then you can proceed.

4. Multi cap funds—> Equity funds which invest all across the market. It is considered as good choice for investment. It also gives record of it's investment. Good for more than 5 years investment.

5. Flexi cap funds—> It also invest in large, MID, small but it there is no need of records. And this is the best choice of more than 5 years of investment.

• Debt Fund—> It gives stable returns with lower risk. It invest in corporate and government bonds, corporate debt securities and money market instruments.

• Hybrid Fund—> It is the combination of debt and equity fund. If more than 65% is allocated to debt instruments by fund manager.

• Money market Fund—> It has lower risk and lower return and it is good for short term investment.

Apart from these given types there are many others also.

WHAT IS EXIT LOAD?

Mutual fund charges 'exit load' when we exit from it pr withdraw our amount from it before locking period. It lies between 0% to 4%

Mutual fund investment depends upon-

1. Time

2. Risk

3. Return

Ther are also many other factors

★ Keep it in mind that every mutual funds make money if you increase your timeframe. If your time period is more than your chance to make profit is also more.

Basically funds are of two types:—

1. Active fund- charge high rate of interest

2. Passive fund- changes low rate of interest

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Link- https://commerceworldteam.blogspot.com/2024/03/what-are-lumpsum-part-4.html

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