MUTUAL FUNDS
If you ever wanted to grow your money then most of the people thought about bank which gives you about 6-7% of interest per annum but if you want that your money will work for you then there are lot's of option which will give you an average of 10-15% interest rate per annum and those options where stocks, mutual funds, intraday trading and many more
Most of the people in the world save their money in the bank account after their salary is credited in their accounts but it's not effective way to save money for future because of inflation the prices of everything is going on increasing and your money is losing value because the value of money is constant and doesn't increases.
Investments made by most of the people are:-
1.Saving account (4-5% return, low risk, low return)
2.Gold (moderate risk because the price goes up and down, volatile returns)
3.Fixed deposits (6-8% return, the deposit is fixed for a specific amount of time)
4.Real estate (low - moderate risk, volatile returns, needs high capital)
Investment should be measured in
1.Return (%)
2.Risk
3.Time
These 3 factors are the main key aspects of any investment if the inflation of the country goes up by 4-6% in a year so if you make any investment in anything the return should be more than 4-6% such that you will get return from that investment if it doesn't give more than that % return than there is no need to invest in that thing.
And second, came the risk factor how much risk you will take in investing the more you take risk the reward will be big but there are also chances that your money will be a collapse but if you invest for the long time in good places than you will be sure that your money will give you money.
And the third thing is the time the amount of time you stick with that investment and wait until it grows and then sells it to earn profits or get good returns.
And don't make all the investment in only one place make it diversified such that if you get lost from one place another investment will cope up that loss.
The most effective way to grow your money is stocking for a long time but most of the people think it as a poker game where the probability of winning is less but this isn't true because if you go and invest in it for long term it will make you rich definitely but some people will say we had no information about how to pick stocks and how to analyze company performance so how could we invest in it.
So let me tell you guys that there is another option for those who hadn't enough knowledge about stocks there was the best option for you that is
mutual fundswhere you can invest and you didn't have to manage it and take any tension about it there are managers (Asset management company) to take care of it.
What are mutual funds?
Mutual fund is a place where you can invest in one place but it was a diversified investment because in mutual funds there is asset management company (AMC) who will take your money small chunks and invest in different places by experts opinions then the return from all that small investment the AMC will take 1-2% of that return and give you the residue of that return.
The risk of that investment is based upon which company you are making the investment in there will be 4-30% return based upon the company and there were lots of mutual funds like tax saving, moderate risk, high risk, large-cap companies, small-cap companies, low risk and many more.
Types of mutual funds
There are categorized into 3 types:-
1.Equity funds
2.Debt funds
3.Hybrid funds
Equity mutual funds are those funds which were your money is deposited in the stock market so it will be high risk and high return funds in these there will be large, mid and small-cap companies according to that the risk will be the more you will hold on for a long time the more return will you get.
Second is the DEBT funds which will deposit your money in bonds, certificate of deposit and many more these were low risk and low return types.
The third one is a Hybrid fund where it was a combination of both DEBT + EQUITY where people invest because they don't want all their to be invested in stocks or bonds so they invest in these funds and there are specific ratios like 70: 30, 60:40 and many more.
Pros and Cons of mutual funds
1. Diversified due to which risk is reduced as compared to other investments.
2. Affordable because you don't have to invest a big amount of money you can invest through a systematic investment plan (SIP) where you can invest per month some amount from your salary.
3. Experts made an investment for you but this was also a disadvantage for you that the investment made by the investor isn't always reliable for you.
4. Another disadvantage is that in an earlier time broker are there to buy funds and they charge large brokerage amount so now these types of brokerages were reduced.
And if you want to invest in mutual funds without any brokerage you can invest through various apps like
1.www.groww.in(groww app)
2.https://sqrrl.com(sqqrl app)
3.www.scripbox.com(scripbox app)
4.https://www.paytmmoney.com(paytm mutual funds)
These apps and website will help you to invest easy through your mobile phones
And one more thing more early you will start the more benefits you will get from it because the compounding effect will work for you if you started investing in your 20's so why are you waiting to get started to invest now.
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