First Let Learn About Basic Knowledge of Investing in Mutual Fund.

What is Mutual Fund?

A mutual fund is investment pool of instrument which he invests money in various securities like (stocks, shares, bond etc) in market instrument.

Mutual fund allow individual to diversification portfolio fund on their own risk. An investor purchases mutual fund they are acquiring fractional

Ownership of assets. The investor returns are dependent on performance of fund instrument.

For ex: A fund manager who is working a company his role’s to manages a mutual fund(company) based on his strategy he wants decide invest in

Active or Passive fund. This will little confuse to understand in Fund House (that is company are investing stock).

Direct Growth Plan: If you are purchasing mutual fund(units) directly from AMC (Asset Management Company). Investor confidently picking

mutual schemes without any third-party help with their own research. This fund has low expense ratio.

Regular Plan: If you purchasing mutual fund with help of third-party offered by brokers. Commission will take by broker, service and in future

expanse ratio will be increase which means fund value will increase every time you purchase. Please Say no to Regular Plan

Type of Investment:

1.Lumsum Investment: One time Investment

2. SIP (Systematic Investment Plan) you can invest in MF (mutual fund) at fixed intervals that is Monthly or Quarterly or Weekly.

For Eg: A Fund Manager invests capital in various asset in equity and debt fund. The goal remains to provide investors which capital appreciation

A benchmark index the basic return comparison and then fund manager invest assets beat’s market index.

What will investor will get in return through mutual fund?

Investors will get in (Per Units) of invest amount schemes from the MFH (mutual fund house) that can be traded in stock market. As value of securities that fund will grows per-units cost of the fund NAV means (net asset value). As an investor get profit the NAV that can be redeemed when Units are higher than brought price.

How to pick right mutual fund?

You should have in mind this is three things:

(i)                     Pick a Fund which meets your short-term or long-term in your financial manner

(ii)                  Decided yourself how much you will invest and how long you will

(iii)               Always there is risks and volatility involved

Choose the parameters which is suitable for your investment

·      Historical returns

·      Performance rating

·      Performance against benchmark

·      Consistency in returns

·      AUM size fund

·      Cost of investment

How an investor Earns from mutual fund?

Creating a wealth is easy. One is from dividends. The Second is from Profits (capital gain).

Eg: if a person is selling is asset is greater than purchase price then investor has earned profit called Capital Gain

What is NAV (Net Asset Value) in Mutual Fund?

Hope you had understood this.

Equity funds specific market index, like S&P 500. Fund House will only invest 65% in equity or stocks on their portfolio in equities. Basically, its high risks in comparative an investor should invest and hold more than 5-7 years. Equity fund normally have a high returns or capital growth over extended period of time. In long-term investing this fund has low tax obligations then Debt fund.

Tip: Equity fund is suits for long term goal such as children education needs, wedding expenses, or own retirement

Valued funds are invested stocks are undervalued and show growth in future.

In focused fund, if a fund manager invests in some stocks in (30 companies) in his research and analysis of market and he belive these stocks will

Perform will in future. Example sector like energy, healthcare, infrastructure etc.

ELSS Fund (Saving’s Tax Fund)

Debt Fund OVT BOND, CORPORATE BOND, TREASURY BILL ETC) 

Equity fund.

Liquid Fund

Hybrid Fund