Mutual Funds are one of the secure investment options in the finance world. Financial planning is an essential skill set for life. It’s not what you learn in school but still is among the most significant factors in determining anyone’s success in life.
Different Types of Investments
It is possible to make various types of investments. From stocks to direct investment in mutual funds and SIP funds, everything is at your disposal.
However, it is essential not to put all the fruits in one basket. Hence, several people rely on professionals to handle their money and get reasonable returns without putting too much on the line.
New To Mutual Funds? – Here Is Everything You Should Know!
For new people, it is essential to understand the definition first. Professionals manage these funds and pool money from several investors to purchase quality securities.
When it comes to financial matters, safety is of utmost importance. Hence, it is ideal that the government regulates these funds. It makes them a safer alternative to investment.
Types of Mutual Funds
- Open-Ended Funds: These funds do not have a fixed date of maturity. It is among the liquid options available.
- Close-Ended Funds: These funds have a maturity period where investors can invest in a closed window of time.
- Interval Funds: Interval funds are a mix of open and close-ended funds. The investors can trade in a predefined period.
Pros & Cons of Mutual Funds
Mutual Funds have both advantages and disadvantages attached to them.
- Diversification: As mutual funds generally have several stocks, the buyers can reduce the risk significantly.
- Liquidity: They are easy to liquidate. Though, keeping them for longer means fewer fees and expenses.
- Professional Management: Professionals manage these funds, and they need to provide relevant information about the funds. Hence, your money stays in safe hands.
- Fees & other Expenses: In India, the portfolio does come with a range of fees and expenses, especially when removing and adding money to the portfolio. Hence, the overall cost can be more.
- Less Control on Portfolio: As the professionals decide upon the allocation of money, you have less control over where to invest.
- Less Predictable: Your portfolio is as good as the professional handling it, which means that the results can become less predictable overall.
Mutual Funds have a range of benefits for investors who want to make their money work without a huge gamble. Generally, low risk means low returns, but they are likely to surpass the benefits of a fixed or recurring deposit with ease.
Hence, opting for a professional Financial intermediary help put money at the right place is much appreciated. Depending on your monthly budget and overall savings, opting for SIP installments can become an option. Moreover, individuals can also decide to make one huge investment. However, it is best to consult the professionals for these decisions and move forward.