What are Mutual Funds?

A Mutual Fund is a fund in which many people invest their money in a chosen AMC “Asset Management Company”. This money given by you to the companies is managed by the fund manager of the company. This fund manager invests in many different companies to increase your money. SEBI ′′ Security and Exchange Board of India ′′ controls all the companies so that the money given by us to the companies does not sink.

How to invest in Mutual Funds?

You Want a Demat account to invest in mutual funds. If you do not have a Demat account then I would suggest you open your Demat account on Groww for free. You do not have to pay any fees for opening an account on Groww and it is the second most trusted stockbroker in India. You can open your account by clicking on the link given below and following some steps.

Types of Mutual Funds?

The special thing about mutual funds is that it gives an opportunity to invest to all types of investors. You can invest here according to your risk. We will give you information about funds according to your interest so that you can increase your money by making the right investment.

•  Equity Funds
•  Debt Funds
•  Hybrid Funds
•  Growth Funds
•  Income Funds
•  Liquid funds
•  Tax-Saving Funds
•  Aggressive Growth Funds
•  Capital Protection Funds
•  Fixed Maturity Funds
•  Pension Funds

– Equity Funds:-

Equity Fund invests money in companies that are listed in the stock market and their returns depend on how the stock market is performing. These funds can give you low or high returns according to your performance. Investing in these funds is considered the riskiest. These funds are divided into different parts like Large Cap, Mid Cap, and Small Cap, etc. You should invest in these funds only if you want to invest for a long time. These funds can give good profits in the long run.

– Debt Funds:-

Debt fund invests money in securities like government securities, treasury bills, and corporate bonds. Debt Funds can provide stable and regular income with low risk. This fund can be divided on the basis of duration like low-duration funds, liquid funds, overnight funds, credit risk funds, gilt funds, etc.

Also Read: Top 10 Best Debt Mutual Funds in India 2024

– Hybrid Funds:-

Hybrid funds invest your invested money in both equity and debt. The ratio to invest in these funds may differ from company to company. This company can invest 60% of the fund in equity and 40% in debt fund. This fund is for those who want to get stable but low returns without risk rather than those who want to take risks.

– Growth Funds:-

Growth fund companies invest only in those stocks which have the potential to perform high. Often those people invest in such funds who can keep their money in these funds for a long time. Because these funds give good returns in the long run. If you also want to invest in these funds, then invest in such funds only if you have spare money, otherwise, you may suffer losses.

– Income Funds:-

Income funds are like debt funds, in that the AMC companies associated with this fund invest your money in bonds, certificates of deposits, and securities. But it is safer than debt funds. It gives low returns but more than the money kept in the bank. This fund is for those who can invest keeping in mind the risk of 2-3 years.

– Liquid funds:-

The liquid fund also comes under the category of debt fund. The AMC companies associated with this fund invest in companies whose maturity period is less than 91 days. In return, that company signs a bond and returns the money within this time with a specified interest. But it is not that you too can invest money only for 91 days. You can invest for as many days as you want, there is no restriction on you.

Also Read: Top 10 Equity Mutual Funds 2024 | Top Rated Equity Mutual Funds

– Tax-Saving Funds:-

These funds are also called ELSS (Equity Linked Saving Scheme). Over the years, these funds have become more popular than other funds. And even if it is giving a 14%-16% annual return while saving your tax. You get a minimum locking period of 3 years to invest here. This fund mainly invests in equity. There will be no tax of any kind on your income from here.

– Aggressive Growth Funds:-

The AMC of this fund invests in companies and stocks which are highly volatile. Investing in such funds is considered very risky. But invest in these funds only if you can take the risk. It can also give good returns with risk.

– Capital Protection Funds:-

If you want to save your invested money, then this fund is for you. This fund will give you a good return of up to 12%. These funds invest half of your money in equity and half in bonds, securities etc. However, the probability of loss in these funds is considered to be very less. If you want to protect your money, then it is advised that you invest for at least 3 years. You will also have to pay tax on the returns you get from these funds.

Also Read: Groww App Review 2023: A Revolutionary Mobile Trading App That Can Help You Make Money

– Fixed Maturity Funds:-

These funds also come under the category of debt funds. You should invest in these funds only if you can keep your money invested for a fixed period of time. The maturity period of these funds can be from 30 days to 5 years. On the basis of your same time period, you will be given returns according to profit and loss. If you want to invest in these funds, then invest for less than 3 years, otherwise, you may have to pay up to 20% tax.

– Pension Funds:-

Companies associated with pension funds come under the Flexi cap category. Which invests your money in equity. The minimum locking period of these funds is 5 years. If you are employed then you can invest some part of your income in these funds and at the time of your retirement, you will have a good amount to live your life ahead. My advice is that you keep investing in these funds till your retirement. Because these funds give good returns in the long run.

Conclusion

Mutual funds offer a convenient and accessible way for investors to diversify their portfolios and participate in various financial markets.

With different types of mutual funds available, investors can choose funds that align with their investment goals, risk tolerance, and time horizon.

Equity funds provide potential long-term capital appreciation, while bond funds offer regular income.

Money market funds prioritize the stability of capital, and index funds provide broad market exposure at lower expense ratios.

Sector funds allow investors to focus on specific industries, while balanced funds offer a mix of stocks and bonds. International funds provide global market exposure.