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Invest in stock market and earn huge returns without being an expert in stock market

 

Want to earn more than what you earn normally on an FD or RD? Knew nothing about stock market or afraid of investing in stock market? You need not worry; you can still invest in stocks indirectly via Mutual funds. Let us understand about Mutual funds and how one can invest in shares via mutual funds.

MUTUAL FUND MEANING

Mutual fund is a type of investment vehicle run by a mutual fund company. These companies are run by mutual fund manages possessing high level expertise in the field of finance and stock markets. These companies pool money from various investors and invest that money in logically selected stocks and securities that are expected to provide huge return. Simply speaking you just need to provide your surplus money to these mutual fund companies and the mutual fund managers would invest your money in intelligently picked shares and other securities that provide you high returns.

ARE MUTUAL FUND COMPANIES SECURE LIKE BANKS?

Yes Mutual fund companies are highly secure. The way Banks are governed by Reserve Bank of India (RBI), in a similar way mutual fund companies are spearheaded by SEBI i.e. Securities and Exchange Board of India and Association of Mutual Funds of India (AMFI). Thus there is no doubt that dealing with mutual fund companies is secure.

         Association of Mutual Funds of India(AMFI)
  

WORK FLOW OF MUTUAL FUNDS

1. Pool money from investors
2. Invest such money in shares and other securities
3. Distribute the return on such investment to investors




MUTUAL FUND TERMINOLOGY

New Fund offer (NFO): It is just like an Initial public offer (IPO). Whenever mutual fund companies’ pool funds for starting a mutual fund scheme they announce NFO. 

Key information memorandum (KIM): It is a document which provides detailed information with respect to a particular mutual fund scheme. It is just like a prospectus issued by the company at the time of an IPO.




NFO Price: It is the price per unit that investors have to pay to invest in New Fund Offer (NFO). It is determined by Mutual Fund Company at the time of NFO. It is usually Rs.10 per unit.





Net Asset Value (NAV): It is the Market value of Net investment per unit. It is determined by Mutual fund Company on daily basis. If an investor wants to invest in an ongoing Mutual Fund he would get units at the ongoing NAV per unit. However if an investor wants to invest in a New Fund Offer he would get units at NFO Price.

Entry Load: Extra amount paid by the investor for one unit of a mutual fund.

Exit Load: Amount Deducted at the time of selling a mutual fund unit.

Lump Sum Investment vs. Systematic Investment Plan (SIP): Mutual Fund Company provides you with two options to invest, one is to invest money in lump sum and the other is to invest in monthly installments known as SIP.



OPEN ENDED VS CLOSED ENDED MUTUAL FUND SCHEMES

There are two types of Mutual fund schemes:

• Open ended scheme:  It is one of the popular scheme in which an individual can invest any time. One can invest in open ended scheme either by visiting the mutual fund company or through website or mobile application of that company. There is no maturity or any kind of lock in period so any one can exit from the scheme anytime. Under this scheme mutual fund company keeps on accepting money from investors and gives them units in return. Following are some features of Open ended mutual fund scheme
1) Both lump sum and SIP options are available for making investment
2) Highly liquid funds, one can invest or withdraw money any time
3) Not listed at stock exchange.
4) Investor can purchase any number of units at the prevailing NAV

• Closed ended scheme:  Under this scheme a mutual fund company announces a New Fund Offer (NFO) for one time. Investor can invest in closed ended scheme on at the time of announcement of NFO by Mutual Fund Company. Closed ended schemes have a lock in period, thus it is quite beneficial for those investors who wants to invest for long term. Following are some features of Closed ended mutual fund scheme
1) Only one time investment option is available
2) Listed on stock exchange
3) Less liquid as compared to open ended scheme, however the investor can sell the units any time in stock exchange (Secondary Market) as closed ended funds are listed on stock exchange.

FAMOUS MUTUAL FUND MANAGERS
Mutual funds are managed by highly qualified managers possessing expertise in field of finance, some of the famous mutual fund managers are enlisted below













Comments

  1. SonikaOctober 11, 2020 at 2:45 AM

    What is the minimum amount required to invest in mutual funds?

    ReplyDelete
    Replies
    1. Sandeep KumarOctober 11, 2020 at 8:02 AM

      Thanks for your comment, you can invest in mutual fund with a minimum amount of Rs. 500

      Delete
  2. UnknownOctober 11, 2020 at 7:19 AM

    How can I start and earn

    ReplyDelete
    Replies
    1. Sandeep KumarOctober 11, 2020 at 8:24 AM

      Thanks for reading the article. If you are a beginner you can start investing in mutual funds SIP plans and can earn a return better than Term deposits.

      Delete
  3. kayan webNovember 25, 2020 at 1:28 AM

    This comment has been removed by the author.

    ReplyDelete
  4. kayan webNovember 25, 2020 at 1:29 AM

    This comment has been removed by the author.

    ReplyDelete
  5. randyortonFebruary 21, 2022 at 4:30 AM

    samngoclinhmhg.com A very awesome blog post. We are really grateful for your blog post. You will find a lot of approaches after visiting your post.

    ReplyDelete

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