WHAT IS MUTUAL FUND?
A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.
MUTUAL FUND INVESTMENT BENEFITS
Mutual Funds has low risks and high potential of growth.
- High Security
- Gain Tax Benefits
- Great Transparency
- Enables Liquidity
- Higher Returns
- Safe Diversification
HOW IT WORKS?
Investors
Investors are individuals who handover their money to Mutual Fund Companies.
Mutual Fund Company
Mutual Fund Company works as a Fund Manager and manages the pooled money of investor by charging some fee.
Research
Mutual Fund Company consists a team who does a proper research to generate higher returns for their investors.
Invest
After researching thoroughly, Mutual Fund Companies invest in different assests for you which are safest.
Returns
They generate a good returns and passes to investors as capital appreciation, which also helps to gain tax benefits.
TYPES OF MUTUTAL FUNDS
Mutual funds are of different types for which every investor has to be aware of it before invetments.
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Type of Mutual Fund
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Underlying Investment
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Investment Objective
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Recommended Investment Horizon
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Liquid, short term government and corporate securities including time deposits including time deposits and special saving accounts.
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Bonds or fixed income instruments such as government and corporate debt securities.
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Short Term (less than 1 yr)
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Bonds or Fixed income instruments such as government and corporate debt securities.
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To provide current income with moderate risks.
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Short to Medium terms (1 to 5 yrs).
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Combination of fixed income instruments and shares of various companies listed on the stock exchange.
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To provide a balanced mixture of income and capital appreciation with moderate risk.
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Medium to Long Term (5 to 10 yrs).
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Shares of various companies listed in stock exchange.
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To provide long term capital growth with high risks.
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Long term (More than 5 yrs).
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Shares or units of a target fund, which ultimately invests the pooled money in specific asset classes.
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To invest at least 90% of its assets in a target fund.
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Depends on target fund but usually long term (More than 5 yrs).
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