Every month, mutual funds move differently. Some categories outperform, while others stay steady. What makes them stand out are the strategies behind them, whether it’s a small-cap fund spotting emerging...
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A mutual fund is an investment vehicle that collects money from various investors and invests it in a basket of assets like stocks, bonds, or gold. Instead of buying individual shares yourself, you contribute your money to a professionally managed pool. A fund manager, who is an expert in financial markets, decides where to invest, aiming to generate the best possible returns for you.
Mutual funds make investing simple, even for beginners. You don’t need to track markets daily or analyze company reports, because the fund manager does all the hard work for you. All you need to do is choose a fund that aligns with your financial goals, risk appetite, and investment horizon. You can invest in mutual funds in two different ways – Lumpsum and SIP
SIP (Systematic Investment Plan): Invest a fixed amount every month. It’s affordable, disciplined, and benefits from rupee cost averaging.
Lumpsum Investment: Invest a larger amount in one go. It is ideal when you have surplus funds and want to benefit from long-term compounding.
When you invest in a mutual fund, your money is combined with that of other investors and managed by an expert fund manager. In return, you receive units of the fund. Each unit has a value, which is known as the Net Asset Value (NAV). It is calculated by dividing the fund’s total assets by the number of units outstanding. The NAV reflects the current market value of the fund’s holdings and is updated daily.
As the underlying assets earn dividends, interest, or capital appreciation, the value of your units increases. This is how you earn returns from mutual funds — through capital gains and dividends.
You can redeem your investment anytime (in open-ended funds) at the prevailing NAV, and the money is credited directly to your account.
Expert Management
Your money is handled by professional fund managers who study the markets daily and make informed decisions to help you earn better returns.
Diversification
Mutual funds invest across multiple sectors, companies, and asset classes. This helps reduce risk because poor performance in one investment can be balanced by gains in another.
Liquidity
Most mutual funds allow you to redeem your money anytime. This gives you quick access to your funds in case of emergencies (except
ELSS, which has a 3-year
lock-in).
Cost Effective
You don’t need a large corpus to invest in mutual funds. With sSIPs starting at just ₹500 per month, you can gradually build your wealth.
Higher Return Potential
Over the long term, mutual funds have historically offered 8–15% returns, outperforming traditional savings options like FDs.
Mutual funds come in many forms, depending on your financial goal, investment duration, and risk tolerance. The three broad categories are:
Equity funds primarily invest in shares of companies across various sectors. The goal is long-term capital appreciation, making them ideal for investors who want to grow their wealth over time.
These funds can focus on large-cap, mid-cap, or small-cap companies, or even a mix of all three.
While equity funds can be volatile in the short term, they tend to deliver higher returns over the long run compared to other asset classes.
Debt funds invest in fixed-income instruments like government securities, corporate bonds, treasury bills, and debentures. They focus on capital preservation and stable income rather than high growth.
These funds are less volatile and generally safer compared to equity funds, making them a great choice for conservative investors.
Hybrid funds are a perfect mix of equity and debt. They aim to strike a balance between growth and stability by investing in both stocks for potential appreciation and bonds for steady returns.
The allocation between equity and debt varies depending on the fund’s objective, which allows investors to choose based on their risk appetite and investment horizon.
Knowing your risk appetite is the first step before making any investment decisions – SEBI Mandates, and we agree.
We carefully derive the right investment amount according to your goal – so you can invest smartly, and live freely.
Mindfully allocate money for different aspects of your life, and rise above the crowd of greed and fear.
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Read More
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3000+ people are growing their wealth with us, are you next?
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