123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

The Basics Of Mutual Fund

By Author: Shashank Pawar
Total Articles: 39

If you are a newbie to the financial and investing world and want to know what is mutual fund as a concept and how mutual funds work, this article can help you. We offer you a look into mutual funds basics and shed light on how to buy mutual funds. You will also learn about the main benefits of placing your money in this investment avenue.

What is a Mutual Fund?
Mutual funds are not intimidating or complicated. In simple terms, a mutual fund is created by pooling money from a large number of investors, which is then handled by an expert fund manager. The manager invests the funds in bonds, equities, money market instruments, and other securities. Every investor is given ‘units’ that represent a part of the fund holdings.

Profits generated from the overall investment is proportionately shared among the investors after subtracting expenses. This is done by computing a plan’s Net Asset Value (NAV). Mutual funds have become a viable investment option for lay investors as they allow you to place your money in a professionally managed, diversified securities basket at an affordable cost.

Benefits of Investing in Mutual Funds
Now that you have learnt about mutual funds basics, let’s look at the chief benefits of investing in these schemes:

Transparency
The plan gives you regular information on how your investment is performing and its latest value, as well as the investments they make with the collective funds.

Low Cost
You can invest in a diversified suite for just Rs. 5,000 and, sometimes, even less. If you don’t want to be saddled with sales charges, you can opt for a no-load fund.

Expert Support
You can contact the fund’s customer support team, who will advise you on how to buy mutual funds and how to sell your fund units. They’ll also offer fund information and answer queries about your account status. Top funds provide comprehensive support on convenient channels to put all your doubts to rest about how mutual funds work.

Flexibility and Convenience
You invest in just one security but reap the advantages of a diverse portfolio and an array of services. Mutual fund managers will help you to collect your dividends and interest payments, and exercise your investor rights. To provide you with the convenience and needed assistance, leading funds often employ a registrar and custodian.

Professional Expertise
Mutual funds use the services of high-level, full-time investment professionals as the schemes have deep pockets from managing large money pools. The managers utilize real-time access to vital market information to execute sizeable yet cost-effective trades for the benefit of investors.

Diversification
To elaborate on how mutual funds work, they minimise risk by investing in a wide array of securities. This reduces the impact of a potential decline in a particular security’s value. Thus, mutual fund buyers can enjoy the benefits of diversification methods typically used by wealthy investors.

Conclusion
We hope this article has informed you adequately about what is a mutual fund and the many benefits it offers to lay investors. Select a suitable fund based on your risk appetite and grow your money securely or quickly. The choice is left to you.

Total Views: 22Word Count: 512See All articles From Author

Investing / Finance Articles

1. Top Dos & Don'ts Of Real Estate Investing
Author: Athena Paquette

2. 5 Ways To Get The Best Deals Using Apps
Author: ShashankBhaskar

3. Everything You Need To Know About Rtgs
Author: nishantdhar

4. Types Of Loans Offered In The Indian Market
Author: Finway Capital

5. Benefits Of Unsecured Loans
Author: Finway Capital

6. Faqs About Transferring Funds From India To A Bank Account Abroad
Author: Rishank Rautela

7. Gilt Funds And Benefits From Rbi
Author: nishantdhar

8. Automated Trading Strategies For Tradestation
Author: Jack Hamilton

9. Is It Possible To Improve Credit Score In 30 Days?
Author: Martin King

10. Steps Involved During Process Of Company Incorporation In Singapore
Author: Singapore Incorporation

11. Find Top-most Business Registration Agencies In Malaysia For All Corporate Services
Author: John Smith

12. Ways To Avoid The Most Common Loan Application Mistakes
Author: Jessey Rose

13. File Gst Returns Online In India@99
Author: advise

14. What Is Demat Account
Author: Rakesh Sharma

15. Non-profit Organisation: Income Tax Exemption Benefits
Author: Akshaya Patra

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: