What is a Mutual Fund and what is it?

Do you know what a Mutual Fund is and how to invest in it. By the way, you must have heard the name of mutual fund many times in internet or news and also that you can earn money by investing in it.
There are many companies of mutual funds which claim that if you invest in our company, we will give you good returns and in addition there are many big banks that do this work. Now even big investors invest in it along with the stock market.

What is Mutual Fund??

Mutual funds are a medium for investing money. In this, many investors' money is collected and invested in the stock market. People who do not know much about the stock market invest their money in Mutual Fund itself.

More and more people do not know much about the stock market, in which company they invest so that they get more profit. Suppose you invested in any one company and if that company goes into loss then your money will also be drowned but this is not the case with mutual funds.

Mutual fund company invests your money in different companies so that if one company goes into loss then the other company also makes profit. The people of a mutual fund company are professionals because they have a good idea of ​​which company can grow in the future.

So in simple words the mutual fund company collects money from people and invests them in the Share Market and provides good returns to the investor. That is why it is said that your money is more secure in mutual funds than share market.

How to invest in Mutual Fund??

Investing in it is quite easy and if you invest for long term then you get good returns. But the most important thing in this is that while investing in Mutual Fund, always choose only good and trusted company.

There are many big companies to invest in Mutual Fund and there are many big banks in the country. Some Mutual Fund names are given below - 

  • 5 Paisa.com
  • HDFC Bank
  • Asix Bank
  • DSP Mutual Fund
  • Kotak Mahindra
  • SBI Mutual Fund

Apart from this, you can also invest through many types of Android App. Or you can register by visiting their website. At the moment Grow App is performing very well and it has given very good rating by the people. You can download this app from the Play Store. And you can take Mutual Fund from it.

You must have heard the name of Paytm, this is an Indian Payment Company, whose founder is Vijay Shekhar Sharma. You can invest in mutual funds from Paytm's Paytm Money App. It has been downloaded over 5 million times on the Play store. 

Types of Mutual Fund??

As you know the company of Mutual Fund invests the money raised by investors in different shares and companies and on the basis of this, there are many types of Mutual Fund. Let's understand this further

There are mainly two types of mutual funds:-

 1. Open Ended Scheme 
2. Close Ended Scheme. 

We will understand this through a table.

Open ended scheme:-

Most of this is invested in a similar type of mutual fund because investors can buy or sell their units at any time. There are few Mutual Funds in open ended scheme which require time constraint. There are also several types of Open Ended Scheme which are given below 

  • Debt Fund
  • Equity Fund
  • Liquid Fund
  • Balance Fund

Debt Fund:-

Such a mutual fund when a government bond comes out or is given as a loan to a private sector. This reduces the risk of risk even if the returns are low.

Equity Fund

People like to take this type of Mutual Fund because it is expected to get good returns. But in the short time you will not be able to earn good returns from it because this type of Mutual Fund gives good returns in the long term.

Mutual Fund's company invests money from Equity Fund directly into the share market. There are many stock market experts who have an accurate idea of ​​which company will earn profit and which company will lose. The company of Mutual Fund does not invest all your money in one company, but invests in small companies in small parts so that even if one company goes into loss, all your money is not lost.

Liquid Fund:-

It almost falls under the category of Debt Fund and its money is spent in the Short Market Instrument for a very short period. These are often for 3 to 6 months and in this you can withdraw your money whenever you want. This gives a little more savings than the savings account, which is around 7%. 

Liquid Fund is very popular among people and it is because of giving good returns in a short time. Which cannot be found in a savings account, because here you can get only 3 to 4% interest. Liquid Fund money is always invested in a small market cap and is largely safe.

Balance fund:-

This type of Mutual Fund is considered quite safe as it is invested by balancing the money. She invests half her money in a share market and half her money in Debt Fund. That is why it is called Balance Fund. Here half the money cannot be spoken because companies invest your money in a very balanced way in the stock market and elsewhere so that you get good returns.

Apart from this, there are many types of Mutual Fund which is based on Market Capitalization. Now in this you have to research which Mutual Fund will be right for you which can give you good returns.

Close ended scheme:-

Under this scheme of Mutual Fund, you cannot always invest in it because you can invest in it only when NFO means New Fund Offer is issued. NFO is issued only a few days before and you have to invest during this period. In Close Ended Scheme, a maturity date is determined and you cannot withdraw your money before the maturity date.

These are also of two types - 
1. Capital Protection Fund
 2. Fixed Maturity Plan

There is a lot of pressure to protect the amount invested in Capital Protection Fund and it is more invested in fixed income securities. It remains open for a fixed period only. Apart from this, in the fixed maturity plan, it is already decided that the money has to be said where to invest and how long its maturity will last. It is invested in Debt Instruments. 

Why should one invest in Mutual Fund??

If you have extra income from your daily needs then you should invest in mutual funds as you can get interest of 3 to 5% in savings account and 8% in FD. And in Mutual Fund you can get 12 to 18% returns. Apart from this, you can also start with Rs 500 in Mutual Fund.

Those who are not experts in the stock market should invest in Mutual Fund itself. It is also considered as an option of the stock market because more and more money of Mutual Fund is invested in the stock market itself. It is better to invest in Mutual Fund for long term as it is difficult to earn more returns in short time. 

How to make money with Mutual Fund?? 

By the way, earning money from Mutual Fund is considered easy in one way because the risk in it is very less. Apart from this, investing in a share market can be quite risky. You can invest up to 500 rupees in Mutual Fund and can withdraw your money at any time.

There are many companies from which you can take mutual funds or you can buy them when an NFO is issued. Invest less money in the beginning and as your money gets made, you invest the same money again. With this you will be able to earn good returns. Apart from this, you can also know the information of Mutual Fund in Hindi from many mutual fund companies.
How Mutual Fund works??
As we have already known above, that a company with Mutual Fund takes money from investors and invests in the stock market, securities bonds and small market cap. Whatever returns they get from your money in Mutual Fund, a commission of 2 - 3% is given to you by them.
Overall, more and more of its money also goes to the stock market because from here they hope to get maximum returns. Mutual Fund has many financial experts who understand how to buy the right stock. And they will always try to invest in a good company so that they and you also get a good income.
The conclusion:-
Friends, I hope that you have liked this article about Mutual Fund. In this, we have tried to tell you every information related to it. Even if you do not know about mutual funds at all, this article will be very helpful for you. In this, Mutual Fund has been covered from the beginning and a lot of end items have also been told.
If there is still any suggestion related to this post, then do let us know by commenting. Share this post with all your friends so that all your friends can know what is Mutual Fund and how many types are there. To get similar posts, subscribe to our blog so that you can get the notification of new posts first. 
What is a Mutual Fund and what is it? What is a Mutual Fund and what is it? Reviewed by Shubham Jadhav on April 19, 2020 Rating: 5


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