Hi friends today i would be explaining you about what is a mutual fund and why we should start investing in mutual funds.
In simple language mutual fund is a fund where investors invest their money with asset management companies and this money is then handled by fund managers who are market experts and experienced professionals hired by the AMC to mange the funds and invest the funds in good stock to get better returns for the investors.
What are the types of fund available?
Equity mutual funds
Debt mutual funds
Hybrid. ie equity + debt
You can invest in mutual funds either in lumpsum or you can opt for sip (systematic investment plan) wherein every month for eg 500 Rs would be debited from your account. This kind of investment is best for a salaried class where you get a fixed amount at month end.
How much return you can expect?
Basically if you are opting for sip for a longer period say for example for 15 to 20 year's you can really expect a very good amount at the time of maturity.
As per the historical records of any funds the minimum return which the equity mutual fund has given is 13 % if you are continuing your sip for 15 years. And the maximum returns has gone upto 35 %
A small example:
Mr. A started sip of 2000 rupees on January 2018. So even if we take the least rate of return which is 13% so at the end of maturity that is on 2038, the maturity amount would be 18 lacs and the investment amount is 4.8 lac. and if the interest rate goes upto say 20% which is common in mutual funds the maturity amount would be 58 lacs which is a pretty decent amount according to your investment amount.
What if you need money urgently due to some emergency?
Yes so there are two types of mutual funds one is open ended which you can redeem at any time (T+2) days and another one is close ended which is locked in for 3 years and which comes under 80 C as a tax saving fund.
So friends please let me know if you have any opinions about mutual funds and thank you very much for giving your time on this post.