When you decide to invest, to fulfil your short-term or long-term goals, the Indian market has a plethora of options in its basket. However, there are questions like Which is the best option? Will it offer better returns? How much to invest? that have to be met.
Mutual funds have been the most sought-after investment tool in India thus far. So, the below FAQs should provide you with a clear picture.
- What are mutual funds?
It is an investment tool where investors pool in their resources to purchase shares, bonds and other securities. These mutual funds, managed by Asset Management Companies (AMCs), hire a fund manager for the investors who take investment decisions on behalf of the investors. The combined holding of the fund is called a portfolio, and each investor owns a portion of these portfolio’s called as units.
- What are the advantages of investing in mutual funds?
One of the primary benefits of mutual funds is that you receive a personal fund manager who takes investment decisions on your behalf. They also keep you posted on the latest developments time-to-time. Mutual funds also have the potential to provide higher returns. You can begin investing at a minimum cost of INR 500 through the Systematic Investment Plan (SIP).
- How to invest in mutual funds?
There are two options:
- You can visit the mutual fund website and invest from there. This process is called direct plan. You have to do the tedious paperwork on your own here
- Else, you can hire a mutual fund manager who will handle your funds from your end. This concept is termed as a regular plan
- What are the types of mutual funds?
There are a variety of mutual funds for every type of investor in India. Some of the popular ones are open-ended funds, close-ended funds, tax-saving funds, equities and debt funds