Mutual funds in India are financial instruments, handled by fund managers, also referred as the portfolio managers. The Securities Exchange Board of India regulates the mutual funds in India. The share value of the mutual funds in India is known as net asset value per share (NAV), which is calculated on the total amount of the mutual funds in India, by dividing it with the number of shares issued and outstanding shares on daily basis.
Mutual funds in India offer flexibility by means of dividend reinvestment, systematic investment plans and systematic withdrawal plans. As these funds are available in small units, they are also affordable to the small investors. The fees charged for to the custodial, brokerage and others services is very low in case of mutual funds. These funds have the option of redeeming or withdrawing money at any point of time. The mutual funds in India have low risk as it is managed professionally.
What are mutual funds?
Understanding mutual funds is easy as it's such a straightforward concept. A mutual fund is a company that pools the money of many investors, its shareholders to invest in a variety of different securities. Investments may be in stocks, bonds, money market securities or some combination of these.
Those securities are professionally and efficiently managed on behalf of the shareholders, and each investor holds a pro rata share of the portfolio - entitled to any profits when the securities are sold, but subject to any losses in value as well.
For the individual investor, mutual funds propose the benefit of having someone else manage your investments and diversify your money over many different securities that may not be available or affordable to you otherwise. Today, minimum investment requirements on many funds are low enough that even the smallest investor can get started in mutual funds.
In general mutual funds fall into three general categories: Equity funds are those that invest in shares or equity of companies; Fixed income funds invest in government or corporate securities that offer fixed rates of return are; While funds that invest in a combination of both stocks and bonds are called balanced funds.
The first thing that has to be kept in mind is that when you invest in mutual funds, there is no guarantee that you will end up with more money when you withdraw your investment than what you started out with.
That is the potential of loss is always there. The loss of value in your investment is what is considered risk in investing. At the cornerstone of investing is the basic principal that the greater the risk you take, the greater the potential reward. Or stated in another way, you get what you pay for and you get paid a higher return only when you're willing to accept more volatility.
Risk then, refers to the volatility - the up and down activity in the markets and individual issues that occurs constantly over time. This volatility can be caused by a number of factors - interest rate changes, inflation or general economic conditions. But it is this very volatility that is the exact reason that you can expect to earn a higher long-term return from these investments than from a savings account.
Mutual funds in India offer flexibility by means of dividend reinvestment, systematic investment plans and systematic withdrawal plans. As these funds are available in small units, they are also affordable to the small investors. The fees charged for to the custodial, brokerage and others services is very low in case of mutual funds. These funds have the option of redeeming or withdrawing money at any point of time. The mutual funds in India have low risk as it is managed professionally.
What are mutual funds?
Understanding mutual funds is easy as it's such a straightforward concept. A mutual fund is a company that pools the money of many investors, its shareholders to invest in a variety of different securities. Investments may be in stocks, bonds, money market securities or some combination of these.
Those securities are professionally and efficiently managed on behalf of the shareholders, and each investor holds a pro rata share of the portfolio - entitled to any profits when the securities are sold, but subject to any losses in value as well.
For the individual investor, mutual funds propose the benefit of having someone else manage your investments and diversify your money over many different securities that may not be available or affordable to you otherwise. Today, minimum investment requirements on many funds are low enough that even the smallest investor can get started in mutual funds.
In general mutual funds fall into three general categories: Equity funds are those that invest in shares or equity of companies; Fixed income funds invest in government or corporate securities that offer fixed rates of return are; While funds that invest in a combination of both stocks and bonds are called balanced funds.
The first thing that has to be kept in mind is that when you invest in mutual funds, there is no guarantee that you will end up with more money when you withdraw your investment than what you started out with.
That is the potential of loss is always there. The loss of value in your investment is what is considered risk in investing. At the cornerstone of investing is the basic principal that the greater the risk you take, the greater the potential reward. Or stated in another way, you get what you pay for and you get paid a higher return only when you're willing to accept more volatility.
Risk then, refers to the volatility - the up and down activity in the markets and individual issues that occurs constantly over time. This volatility can be caused by a number of factors - interest rate changes, inflation or general economic conditions. But it is this very volatility that is the exact reason that you can expect to earn a higher long-term return from these investments than from a savings account.
Source: http://economictimes.indiatimes.com/Personal-Finance/Mutual-Funds/Mutual-funds-offer-flexibility/articleshow/4832218.cms
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