You invest money in mutual funds through SIP, and the fund manager manages your money. Which stocks to buy and which to sell is decided by the fund managers. Mutual fund companies charge some money to manage your fund; it is called the expense ratio.
Is it good to invest in mutual funds?
In this blog, know what the benefit of mutual funds is and whether mutual funds are right for investment? We will know about how to decide the mutual fund in this blog, and for which reason, we can start…
If you want to invest in equity markets and do not have complete knowledge of the stock market then you can invest in mutual funds, because the fund manager puts your money in good stocks there.
And one more thing, if you are investing in stocks alone and you do not have enough money that you can invest in companies like MRF, Page Industries, Eicher Motors then you will not be able to earn returns from such stocks.
So if you invest even 500 rupees in mutual funds, then your money can be invested in these companies because, as soon as 1000 people’s SIP even 500 rupees, then Rs 5,00,000 will be passed to the fund manager.
That manager will easily invest your money in these stocks if these stocks are available on the best valuations. And that is one of the importance of mutual funds, and you have to invest in mutual funds and diversify your portfolio.
Are mutual funds worth it?
If you invest 10,000 rupees every month and consider it gives 12-14% returns for 20 years, then you will have more than one crore rupees. According to this, you should invest in mutual funds according to you.
Mutual funds have categories, so every type of mutual fund is different because funds invest in various stocks according to the companies and different periods, and the returns from this also vary.
If you know where you want to invest and according to what period of investment, then you have the right mutual funds.
What is the minimum amount for mutual fund?
At least Rs 500 per month will also be right for investing in Mutual Fund. See, the mutual fund companies invest your money in good stocks so that your money will also be invested in the best and well-managed companies.
By investing little money every month in mutual funds, you can get good returns in the long run, and this is the significance of mutual funds.
These are some of the disadvantages about mutual funds which are in some funds and not in some.
- Lack of fund: When the market falls, many investors withdraw their money from mutual funds, due to which the fund manager does not have enough money. The result is when stocks are available at low prices, due to lack of fund, and Fund Manager does not buy shares which will impact on best returns.
- Some mutual funds take a lot of funds for the greed of higher profits because the money earned by the mutual fund company makes 1-2 percent profit on that capital, which is given by the SIP investors.
Mutual fund companies launch their funds with categories And mentions which kind of stocks your money will invest in. Categories like
- EQUITY Mutual Funds: Large-Cap, Mid-Cap, Small-Cap, Multi-Cap, ELSS, Sector, etc.
- Hybrid Mutual Funds: Arbitrage, Aggressive, conservative, etc.
- Debt Mutual Funds: Low Duration, Dynamic Bond, medium Duration, Liquid, etc.
Mutual Funds For Goals:
See, every category of funds gives different returns and has different risks. So you have to choose which one you want to invest in and for which period you should invested in mutual funds.
Large-Cap Funds: If you have to take a fund for the education of your children, then you have to take a safe fund. Meaning you have to select a large-cap fund.
And for the wedding, for the house and for some of your dreams, you must select a safe fund, that is, you can select a large cap fund.
Like if you want to do holidays abroad, then you can invest in some risky funds like you can invest in multi-cap.
Tax Saving Funds: ELSS comes under 80c (Equity Linked Savings Scheme). ELSS Mutual Fund is good to save tax, you are not only saving tax here, but you can also make your wealth. There are many provisions in our income tax so that you can save your income for a long time
If you invest in this fund, you can take deduction of up to Rs. 1.5 lakh in income tax. So you can select good ELSS funds and invest in those funds.