What is Mutual Fund and its Benefits
What is a mutual fund, how it works and what its benefits are all aware today in Hindi. How it works and its advantages. Who is the unit, how to invest in a mutual fund, and how it is considered as a more secure investment rather than directly investing in the stock market. If you look at it closely, then fearing to understand the fundamentals of the mutual fund is not really necessary. So to explain this, it is important to answer a basic question that what is a mutual fund?
What is a Mutual Fund–
The amount deposited by a large number of investors is called a mutual fund, which is put into a fund. The fund manager uses his investment management skills to invest this money in various financial instruments. Mutual funds invest in many ways, which determines their risk and returns.
What is the Unit–
When many investors invest in a fund together, the fund is divided into equal parts called unit or unit.
- Suppose some friends want to buy a piece of land. The price of a piece of land of hundred square yards is one lakh rupees. Now if you divide this fund into ten rupees units, then 10,000 units will be created. Investors can purchase as many units as they wish, according to their investment capacity. If you have only one thousand rupees for investing then you can buy hundred units. In the same proportion, you also become the owner of that investment (land).
- Now assume that the value of this one lakh investment has increased by one month to Rs 120,000. Now, according to this investment, the unit price will be deducted and then the unit of ten rupees is now twelve rupees. The investor who bought hundred units in one thousand rupees, according to the twelve rupees per unit, now his investment (100×12) has been Rs. 1200.
- Based on the amount invested by you as an investor, how many units you own. Therefore, an investor can also be known as a unit holder. In addition to the other income earned from this, the increase in the value of the investment is reduced to the investor / unit holders in proportion with the number of units after deducting the expenditure, loads and taxes.
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Benefits of Mutual Funds–
- With this you can see that an investor, who cannot make big investments, has the facility of investing in small units.
- Apart from this, the biggest benefit of Mutual Fund MF is that an investor who does not have much information about the market leaves his investment in the hands of experts.
- These experts determine where, how and when to invest. Besides knowing the benefits, it is also appropriate to know the risk in investing in mutual funds.
Where to Invest from Mutual Funds–
Mutual funds invest in many ways. The most prominent bonds and stock markets are. Apart from this, you can invest in Gold or any other commodities. There are several types of funds which are known as their investment. The main ones are Debt, Equity and Balanced Funds. The highest variety is found in equity funds.
Why is the Choice of Investors-
- In recent times, mutual funds have been investing as an investment option and more and more people are investing in it. The main reason for this is that investing in mutual funds is easy and investing in mutual funds through SIP is becoming more and more people’s choice.
- Mutual funds are a very good option for investing where interest in banks is decreasing. If invested for a long time, it can become the best way to get the most returns on investment.