Everything you need to know about Mutual Funds

jupitadas625 

What Is Mutual Fund?
Mutual funds refers to an investment option where many people invest their money which is polled togather to buy a variety of stocks, bond or other securities. All these are managed by a professional money manager. In 1924, the first modern mutual fund i.e MF’s Massachusttes Investors Trust (MITTX) was launched in US which is still in existence.
Mutual funds basically provide access to a broad range of investments to the individuals and reduces the risk compared to investing in a single stock or bond. In simple words, mutual fund provides part-ownership to the individuals who buys a mutual fund of all the underlying assets that fund owns. In this way, investors can invest in a much wider swath of the market through a single mutual fund.

How Does It Work?
The performance of the mutual fund depends on the assets held by it. When the value of these assets increases, the value of fund’s shares also increase. Again, the value of the fund’s shares decrease when the value of the assets decrease. The fund manager is responsible for allocating all the money across sectors, industries, companies etc. strategically to make profit out of it.

How One Can Earn From Mutual Fund?

Investors can earn from mutual fund in many ways:-

  1. Investors can earn from dividents on stocks and interests on bonds. The fund owner get paid all the income received over the years, in the form of a distribution.
  2. When the fund sells securities with increase in price, fund realises a capital gain which is distributed to investors.
  3. Investors can sell their mutual fund shares for a profit in the market when the price of those share increase.

Types Of Mutual Funds

Mutual funds can be devided into four major categories:-

  1. Money market funds
  2. Bond funds
  3. Stock funds
  4. Target date funds

All these types contain different features, risk and reward according to the type.

Advantages Of Mutual Fund

The advantages of mutual funds are discussed below:-

  1. The investors get access to wide swath of the market through a single mutual fund and can participate in a professionally managed and diversified group of securities, which as an individual might prove to be difficult.
  2. Investors need not put their time. Along with time, knowledge and resources are also not required to invest.
  3. Mutual fund is managed by professionals which makes it an easy way to buy shares which also diversify your risks.
  4. One of the major advantage of mutual fund is affordability and liquidity. Investors can invest small amount according to their convenience and also can easily liquidify their money.
  5. Longer term mutual fund investments can also give you tax benefits.
    Mutual fund can prove to be very useful when is uesd properly. As an investor you should always pay attention to the scheme related documents carefully to enjoy the benefits to the fullest

Recommended Posts

How To Earn Money Online

“How to make money online” is a common question many people are asking right now , as they started knowing about new income streams. Making money online is a great way to give you relief from the 9 to 5 and it gives you the freedom to follow your own working schedule , travel the […]

jupitadas625 

Cyber Security

What Is Cyber SecurityCyber security can be defined as the responsibility to defend computers, servers, mobile devices, electronic systems, networks, and data from unknown attackers. In this advanced world, it has importance in all the sectors and can be applied in variety of contexts. Types Of Cyber Security Though it doesn’t include any particular type, […]

jupitadas625 

Everything you need to know about Mutual Funds

What Is Mutual Fund?Mutual funds refers to an investment option where many people invest their money which is polled togather to buy a variety of stocks, bond or other securities. All these are managed by a professional money manager. In 1924, the first modern mutual fund i.e MF’s Massachusttes Investors Trust (MITTX) was launched in […]

jupitadas625 

How to Get Rid of Credit Card Debt?

Nowadays most of the people use credit card. It plays an important role on financial system of the people. While on one side it has so many advantages , sometimes also proves to be life saving thing in many situation , on the other side it also has few disadvantages and it can ruin the […]

jupitadas625 

2 thoughts on “Everything you need to know about Mutual Funds

  1. www.sekret-natury.pl

    Outstanding feature

  2. Odkryj jak

    great article

Leave A Comment