Know all about Mutual Funds | Fusion - WeRIndia

Know all about Mutual Funds

Know all about Mutual Funds

Mutual Funds are a hot favorite for many investors.

They give great returns for the money invested. But many people do not know what these funds are how they work.

Read on to know everything you need to now to get started with Mutual Funds.

As the name indicates, mutual funds schemes collect money from various investors and uses the money to buy and sell stocks collectively.

The place where they invest the money differs based on the type of fund it is.

After that, the fund offers you units at a rate of say ₹10. If one buys a set number of units, they pay the amount and wait. After a year, the value can increase to ₹12.

Now, one can sell the units back at the increase price and get a profit. Any new buyer who is interested at buying units would have to pay the current price.

This is the simplest way mutual funds work without having to think about concepts like entry and exit load.

There are various kinds of mutual funds in India. Equity Funds invest most money into equity shares. These schemes are high risk ones which also result in high rewards.

But it should be noted that investors can make losses in these.

Debt Funds invest most money into debt schemes like corporate debt, debt issued by banks, etc.

These are safe schemes but the return is also lower.

Balanced funds invest their money in equity and debt.

They find a middle ground to the risk and reward. They alter their investment pattern based on market conditions.

Money Market Mutual Funds are also called Liquid funds.

They invest in safer short-term instruments like Certificates of Deposit, Treasury and Commercial Paper.

Gilt Funds Gilt Funds are the most secure kind of mutual funds.

These are backed by the government itself.

Image Credit: Nick Youngson CC BY-SA 3.0 Alpha Stock Images

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