Realize All Your Dreams with Mutual Fund Investments

Posted by Dishika Baheti on July 30th, 2018

Are you an investor who is hesitant to invest in the stock market but some where has a wish deep inside to do it? You may do so by investing in mutual funds which is an indirect stock market investment medium. Mutual Fund, as the name suggests, is a fund which is collected mutually. Contributors of this fund can either be a retailer or an institution. Retailer means any individual and institutional means any company or firm, basically entity. This fund is collected to be invested in various types of securities(which is shared later in this article) to help you earn some income over a period of time to fulfill your financial requirements and dreams

Usually, people invest individually in term deposits, real estate, or in the share market but mutual fund is a safer option comparatively as it helps in earning a decent income safely on a nominal amount unlike term deposits which provide a lesser rate of interest, real estate which needs a huge amount of investment, and share market which is full of risk. It is a safer and much healthier option for all classes of people who are willing to earn a decent returns over a period of time with much lower level of risk. That is, if you are looking for a stress-free investing option, mutual fund investment is the answer.

Where They Further Invest To Yield Income?

Equity/Stock - Equity is the capital invested in a company and is also known as owner’s fund which can be calculated as the difference left after deducting liabilities from assets and comes under long term investments. Investment in this category of schemes usually involve high/moderately high risk but may provide high returns as well if held for a long-term.

Debt/Bond - Debt or bonds are the borrowed funds which are a liability to a company. They usually provide fixed income to the investors, and thus are also known as fixed income funds.

Money Market - Money market is for short term investments which have a maturity period of one year or less with high return value which make investment in Commercial Paper, T-bills, Call Money, etc. They are mostly used instead of bank term deposits but they don’t have government backed security like the latter one.

Hybrid - Hybrid investments are a mixture of equity and equity related instruments, debt, and money market instruments. It helps an investor earn capital growth along with consistent income and adjusted risk.

Modes of Investment

Mutual Fund investments are usually done via two modes which are as follows:

Lump Sum - When the amount is paid by an individual or entity, one time only, it is called Lump Sum, i.e., you need to pay the amount in a single go. The benefit of paying in Lump Sum is that you only have to pay once and can redeem when the maturity date arrives.

SIP - SIP stands for Systematic Investment Plan which means that the amount per person or entity is paid systematically. It is usually paid weekly, monthly or quarterly. The amount is deducted from the investors bank account periodically and the units invested in are added to the investor’s account. Investing through SIP mode is beneficial in creating a saving habit and earning compounded benefit. It is a great opportunity for people who have other financial commitments and can only invest in small amounts.

Today, there are a number of asset management companies available in the mutual fund market that have launched numerous schemes under different categories as mentioned above. With “Mutual Funds Sahi Hai” campaign, today they have gained even more popularity and reached almost every household. If you haven’t started yet, then you may invest in mutual fund online as well as through offline mode today to park your idle money and earn fruitful returns.