Are you an office going person, or doing work from home(WFH) these days from morning to evening and do not have much time to look for what is going in the market, and are looking to find some avenues for investing your funds/savings/assets in some asset classes for excepting a better return, then this the right place for you. After reading this page, you will understand the basics of Mutual Funds and how you can invest in mutual funds of various categories.
What are Mutual funds ? Mutual Funds is a mixed bag of various asset classes or financial instruments. Based on the type of the asset class or the financial instrument, mutual funds can be classified into different types-
- Equity Mutual Funds
- Debt Mutual Funds
- Hybrid Funds ( Equity + Debt Funds)
Let us check out in detail about these funds.
Equity Mutual funds – In these funds, the fund managing company also know as the Asset Management Company(AMC) takes the amount from the customer, and invests the amount in the equity shares of various companies of different sectors. The percentage allocation in different shares is decided by the fund manager of that fund to maximize the return on investment for its customers. These funds are High Risk and High return funds as they are susceptible to the fluctuations in the market, but in the long term, they can generate a good return for your wealth creation and future lifestyle goals.
Debt Mutual Funds – These mutual funds are the low risk, low return funds usually preferred by the conservative investors who wish to invest their savings in some safe instruments which are always increasing. In such type of funds, the fund manager invests the amount into various Debt instruments such as the Govt Securities issued by RBI, Reverse Repo Rate Instruments, State/Central Govt Treasury Bills, Bonds etc. These funds move slow and steadily but at a constant pace and are considered as the most safe funds.
Hybrid Funds – These are not a separate category fund but it is a mixture of the above two funds in certain ratio such as 50:50 or 60:40 or anything chosen by the AMC or the fund manager of the fund. They are the most popular funds for those type of investors who want a high return but also don’t want a high exposure for risky funds.