Mutual Fund- The New Hype In The Investment Schemes Among Commoners

Mutual Fund- The New Hype In The Investment Schemes Among Commoners

The money market is always changing. It is a flexible industry which sees the constant ups and downs. To invest in the money market, we need to be quite aware of different aspects. It is always essential to know each thing in details and then step forward with the investment.

In the last few years, we have been acquainted with a new term “Mutual Fund.” Many people are investing in the mutual fund while some are not. If you are confused about investing in such a plan, then you must know what this is actually.

By definition, Mutual fund is a type of fund where common people can invest money on behalf of various organizations. The money is being invested on behalf of them and is being given the interest for the money invested. This investment plan is perfect for regular investors who have little knowledge about investors. The financial goals of the mutual funds can be chosen based on the necessities of the investors. To achieve the goal, the investment can be done and started instantly.

Types of mutual fund

There are different types of mutual funds which are being maintained by the SEBI in India.  Here are the four categories:

  • Equity mutual funds- invest directly into the stocks and get the profit directly from the stocks. You can even get the superior benefits but is also risky. That is due to the performance of the stock market. The investment should be made for at least 5 to 10 years to get a good return too.
  • Debt mutual funds- in the case of short term goals, the investors should choose this type of mutual fund. These are for below five years scheme which can even give a very good return
  • Hybrid mutual funds- it is the combination of both the equity and the mutual debt fund. Based on the risk factor and the return of the scheme, the investor should pick a scheme.
  • Solution-oriented mutual funds- they are particularly for some goals like child’s education, retirement plans or any other tasks in life. But particularly this scheme has five years lock-in period, and you cannot break the policy before that.

So based on the various factors which you can consider, choose the type of mutual fund suitable for your investment. As the money is being invested in behalf of the funds, so a small charge is being deducted. This is known as the expense ratio and is being charged on per unit cost. This cost is for managing the fund and organizing it.

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Shall I invest now in Mutual funds?

A common question before considering the mutual fund is shall I do it now?

Yes, the market of the mutual fund is quite risky. It depends on the ups and downs of the money market and the stock exchange. The high return that you are expecting the need to be considered only when the market has higher profits. It is always suggested that before investing in mutual funds do detailed research about it. If you are unable to do so, then take the help of the experts who can help you out with the task. Taking tips from colleague or friends is not at all trustworthy as the case may be different for you than your friends.

The first thing that should be considered before investing in Mutual fund is the goal for investment as the equity will not be the perfect one if you are planning for a less than five years goals. In that case, you can opt for any of the debt schemes. On the other hand, if you are planning for a long term like a retirement plan, then the equity is the perfect choice for you. The current market status cannot give you an idea about the goal that you are thinking of.

New changes brought by the SEBI in mutual funds

IN the year 2019, the asset management companies have assured that the mutual funds have got much easier and risk-free now. SEBI has made many changed in the regulations and the fee charges which made it easier for new investors. The schemes are changing with their basic character, and that is due to the changes brought by the SEBI. Now the funds will have their categories which would make it easier to choose for new investors. The maximum number of funds by a company has bee defined by the SEBI, and they should be termed with the categories and not with absurd names. Hence they are much focused now on their investments. New names are given to the schemes which are more meaningful for new investors.  Many schemes are also merging up under the new scheme. So they would be getting new categories and names too.

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Well, that can be a bit confusing for the existing investors as they need to do lots of changes in their present investments.

Concluding with the positive feedback of Mutual funds

Wrapping up, it is all for the convenience of the new investors. SEBI is encouraging more and more people to come up in the mutual fund scheme and invest more to such schemes. These schemes are showing positive results and bringing in a more business too. The risk factors involved with these schemes have been reduced to zero. Hence people are getting more trust over the mutual funds now. They are taking the courage of investing broadly and getting in new schemes for the goals in their life.

You can find many of the websites and asset management companies over online assisting you with the mutual fund matter. They can help you identify the right type of investment for you and get the goal fulfilled. Consult with such a company before stepping forward with the mutual fund investment. Fulfill all your dreams of buying a house or a car or even send your child to abroad for education through this investment. Some people even get a corpus amount of money after they retire with the right investment plan. Hope this article would be useful for you to take investment related decision.

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