Mutual funds : Its is pooled investment by people .
Hi all friend today’s post on different ways of money investment .also we will see how to invest money in mutual fund? and types of mutual funds.
As being common man or as beginner of mutual fund investor all the information you need to know. You will get all the details of mutual fund, types of mutual fund in details in this post.
Every month your salary is credited into your account then you keep same part of that amount in saving for later uses, May be you want to buy a new car or buy home and some emergency purpose we are saving money .
Basically in our country every person save his money in bank account, this is a bad habit to saving money in bank account because every year inflation rate is increased by 4 to 5 %. if you saving money into bank it’s give you 4-5 % interest on that . So value of money becomes same as previous year investing money and its interest.
There is different ways to invest money.
Basically in india peoples are invest into following resources.
- Saving account
- Fixed deposit :
- Gold and jewellery :
- Real Estate:
- Stock market :
Every investment has three things. We will discuss in detail of each things
1 Return :returns means how much percent of profit are you earning through the investment .if inflection rate is 4% then you should see that your profit return is more than at list 5% . Otherwise there is no point of investment.
2) Risk : means how risky it is to invest, what is the chance of losing all your money in that investment .what is the chance of going in loss after investing money.
3) Time: Time means for how long are you investing.
Basic Rule of investment is if you want earn more return percentage on your investment then you will have to take more risk and should invests for a longer period.
Type of Investments
Saving account has the minimum risk and there is no restriction too. You can save or take the money out at any time. But return we get here is also very less, only 5% where as our inflation rate in the last few year 4%-5%.
IF you invest money into saving account then you will get Max 6% of return.
is also a less risky option but it has a time limit before that we can’t take the money out .
Hence the return is also a bit more near maximum 9% .
Gold and Jewellery
Gold and jewellery these days have a significant risk, their prices fluctuates a lot Here is little bit moderate risk . If you are going to see this history then you will know that until 2012 the price were consistently increasing. if you would have invested before 2012 then you would have got a good return here.but after 2012 there have been a lot of ups and down but they have maintained a level hence there s not a much profit.
If you invest in Gold it will return you 6-8% maximum.
And there is another way to invest money into the LIC .when you investing money into LIC policy it also return up to 6-6.5% .
Real estate and property
Real Estate and Property: Investment in the properties and real investment has low to moderate risk I would say .you can search the India’s housing prices in the last few years. It has come up and down a plot
In the quarter or march 2011 it has touched the return rate of 30% and in march 2018 Latest quarter then it gives just 5% return rates.
one of the disadvantage in investing in housing is that it need a lot of capital.you need to have lakh and crore of rupees to invest. Know people also thing buying new home with latest design instead of old one.
You might have heard about stock market , you can get a lot of returns here also loss. The risk of investment in stock market depends on the stock where you are investing. you need to have good knowledge of the performance of the stock and how does the stock market works basically. Do not invest here , if you don’t have stock market knowledge .
So these are few main types of investment that I have share you but there are some types too.
Like government bond, corporate bonds, we have crypto currency too these days, people also invest in bit coins.
A general well known advice is that friends you should never invest your money only at one place .it is risk to invest in one place .
You should invest at different places so that if there’s any crash then you will not have to bear the over all loss. It’s a very less chances of everything crashing altogether like gold ,properties and even stock market as this happens were rarely .chances are that if one thing crashes then you can get profit from other .this is called diversification , you have to invest at different places.
What is Mutual funds?
Basically mutual fund is nothing but pooled investment by people .peoples are investing their money into the one place that is Asset Management Company (AMC).
An asset management company (AMC) is a financial services company that offers different mutual fund schemes to invest
they have appointed expert and with their suggestion they invest the money. these people invest your money different sector of companies ,like banking, IT, Infrastructures, Pharmaceuticals, oil companies, gas companies etc.
invest money at different places and the return rate they get collectively from these different places. Out of that some small percent of 1-2% is kept as a profit by the asset company and the rest you get back as per that return rate.
Hdfc, HSBC,ICICI,Aditya Birla Reliance,TATA , these are the few examples of companies and banks who have started their own assest management company.All the companies starts different kinds of mutual funds in large numbers.
they invest the money.they know how risky is your mutual funds and what is the return depends on the mutual funds that you are investing in. Mutual funds can give return rate minimum 4% and also of more than 25% too.it can be zero risk and also of high risk to. Because all this depends on where the asset management company is investing your money. if that company is investing on stocks then it will be more risky and you will get more returns.
And if they investing in the government bonds then it will be less risky it returns also less.
Types of Mutual Funds:
Various types of mutual funds depends on the basis of the investment done by AMC people.
we can divide this in 3 categories:
- Equity mutual funds(stock market):
In Equity Mutual Funds, your money will be invested in the stock market. So naturally in this type of Mutual funds generally the risk is more and also the return.
I)Large/Small/Mid Cap Equity funds”
In the stock market on which kind of company are you investing , if it’s a big company then its called as Large cap Equity funds. if it’s a small company then it’s called as small cap Equity funds and same way mid cap equity funds.
Big company doesn’t have much risk as compared to the smaller ones but big companies won’t have growth rate as high as it can be for the smaller companies. So risk or return both are less in big companies.
Here we have a very use full mobile app . Name of mobile app is groww.
This app gives you all information regarding mutual funds , here you have set every Month what amount do you want to invest , for how long and you will get the expected returns.
This app works by checking the past history of the mutual funds. that before to today in the last 5-10 years what has been the performance of the mutual funds, what’s the growth and it gives you the number based on its average growth.
But one thing keep in mind friends that this is an expected return not the guaranteed return , it still depends on the stock market. Since the mutual funds has given such a performance in the past that doesn’t mean that will perform the same in the future.
It still depends on stock market so it will have risk, especially because its an equity mutual funds and investment is on the stock market.
So don’t just look at the returns rate and invest, if you scroll down then you will see the pros and cons too.
That means among all other larger cap equity funds the benchmark of the risk of this particular fund is less.
So this is good point here that compared to other ones this has less risk. You can see the pros and cons with help of groww app it download and search information regarding mutual funds.
2) Diversified Equity fund:
Basically this fund known for multi-cap funds .Here the investment is done in the large , medium and small cap or its’s done in different companies.
3) Equity linked Saving scheme:
This is a special type of equity fund where you can save your tax.you can save up to 1.5 lakh in the taxes .the fund manager purposely invested on such places where there’s high return and also has high risk.
4)Sector Mutual Funds :
here specifically such companies are invested on which belongs to big sector like Agriculture sector. For example all the companies which are under the agriculture sector,they are invested on
5 Index Funds :
Are passively Managed funds that is no agent of AMC is looking at where to invest the money here.these ar passively managed that is according to the markets rate up and downs they too go up and down.looking at the price of sensex and nifty it varies.
Types of Debt Mtal Funds:
Debts instruments are bonds ,debenture,certificstes of deposites now thse things are exactly what you can read it for yourselves. In this risk is low risk.
- Liquid funds: are those mutual; funds which can be easily and quickly converted in to cash. It has very low risk , such low that you can basically consider this as an alternative to having account.
- Fixed maturity plans : this can be considered as an alternate to fixed deposit.
Hybrid mutual funds:
Some people wants to invest in the stock market but don’t want to invest all the money there and also some amount in the debt instruments, so hybrid mutual funds are for them
- Balanced saving funds (Equity funds):the 70% of your money is the low risk debt funds and 30% is in the equity funds.
- Balance Advantage fund:
if it is other way ,70% is in the equity funds at higher risk then it is called as a balanced advantage fund.
These are some types of investing money into the market. So you can decide which is suitable way to invest money . Before investing money in any area take knowledge accordingly and find the better way to invest money.