types of mutual funds

types of Mutual funds

mutual funds

Whenever you do investment behalf on your interest you will always face 4 points which you have to understand first.

1.     Risk – you have know every investment has a risk even your saving bank account is also under the risk if the bank goes bankrupt in that case you lose  your money

2.     Returns – this is the most important thing about investment how much return we all get from a mutual fund in the long term between 5 to 10 years,

T    the second thing we need to know which is important if the return is not crossing the inflation then we     are not getting any profits even we are in losses as well.

3.     Volatility – that means sometimes market goes very down and side it goes very high, but if you need the money and that time market is very down in that condition what will you do.

4.     Liquidity – it’s about how earlier you can withdraw your money from your investments.

How the mutual fund works

Anyone mutual funds company takes your money and the company invests it in many other ways like stocks, real estate, bonds etc.

 you can say it works like stocks you can see here up and downs and the risk or investment in mutual funds  is moderate to high because if we compare it with stocks then mutual funds are safe than stocks or you could say stocks quit high risky than mutual funds.

 Mutual funds are riskier if we compare it with fix income security, real estate and gold investment

Volatility is high here because of it all depends on Sensex and nifty some it can go 30% up or maybe 30% down some the time it goes 50% up and 50% down it all depends on market condition.

If we talk about on an average returns then you can earn 13% to 15% from mutual funds.

If we talk about liquidity then you can sell it any time.

Why we invest in mutual funds  

If you want to take a low risk and high returns then you can invest in the mutual fund. If you don’t have knowledge of stocks and you don’t want to participate directly in stocks then you can invest in mutual funds.

Mutual funds give you low risk and high return due to mutual funds invest in multiple stocks and these stock are selected by a specialist here you will see the expertise of specialist which you don’t have right now or you don’t have time to research.

So the mutual funds are a good option if you want to earn good returns. If you are looking for 5 to 10-year returns then you will defiantly beat the inflation easily

Features and types of mutual funds

Mutual funds are house A lot of people invest in mutual fund and fund managers are investing in different type securities and they give the profits as a return for this long process they take a commission from our profit.

This kind of fund houses manage by asset management the company, for example, sbi mutual fund, axis mutual fund, icici prudential, Aditya Birla and etc.

You can see lots of companies in India who run multiple funds any company can run 400 to 500 funds but mainly three types of fund are exist

1.     Equity MF – its work on stocks.

2.     Debt MF – its work on fixed income security for example bond, certificate of deposit and etc.

3.     Hybrid MF - its work in both stocks and fixed deposit income.

You can categorize mutual funds in one other way

1.     Large-cap – it works with big companies of senses or nifty  here you will see low-risk low returns

2.     Mid-cap -  it works with lower than top companies here you will see moderate risk moderate returns

3.     Small cap – it works with small companies but here you will see a high-risk high return

Sector funds

1.     Technology funds

2.     Banking funds

3.     Automobile funds

4.     Agriculture funds

5.     FMCG funds

Tax saving funds

1.     3 year lock-in period (here you cannot withdraw you many between these periods)

2.     Tax deduction under sec 80c (in few special funds)

Index funds

1.     Linked to Sensex and nifty directly

How to invest in mutual funds

 SIP – systematic investment plan

  Returns are – average out

You invest in sip on monthly basic But here you are the best benefit is you will see the change in yourself you always save and invest you money because it will become your habit.

lumpsum -  never invest in a lump sum when market looking high at that time high chances to lose your money.

 Invest in a lump sum when the market gets down as much as down is good for you because after a few years you will see the big profits.

What to check before investing in the mutual funds

1.     Last 5 to 10-year returns

2.     Expense ratio 1% to 2% maximum

3.     Entry load and exit load

Entry load – when you are going to invest in mutual funds how much they are charging for up front.

Exit load – when you selling you funds how much they charge you

Goal-based or monthly target

Suppose after ten years you want 20 laces than then you can calculate how much money you need to invest per month for how many years

You can calculate is on any mutual funds website where you will see the calculator  of mutual fund

For example

SBI MUTUAL FUNDS 

I am calculating my goal 15 years from now from 2019 if you also want to calculate then click here

As you can see if I invest 2 thousand for 15 years totally I invest 3,60,000 laces in 15 years.
 after 15 years I will withdraw my money with on average 12% of return then I will get more than ten laces.

I don't think so any middle-class person salaried person saves ten laces in 15 years. so this is the easiest way for you.

isn't it great for a middle class person, 2000 thousand rupees is not big for middle-class people?
if you feel about any scam then here is no the chance for the scam because this bank runs under the government of India.