A glimpse about Mutual funds
We all are fascinated about growing our passive income apart from the income that we acquire from various active sources i.e. from our jobs etc. But during the process when we desire for the time when “Money can work for us, instead of we working for it” as said by the great financial trainer Robert T Kiyosaki. We generally tend to have a fear or confusion whether we should invest in stocks or not?
This usually happens with most of us. The primary reason for this could be the lack of fundamental financial education. Having a desire to invest but unable to do so creates a dilemma which in turn opens a Pandora’s box for ourselves and we keep on working for money instead of creating a system where money can work for us.
What basically Mutual fund is?
A mutual fund as the name suggests is a fund in which several investors put in their share or contribution to generate a pool of money. This money is in turn invested by the company that basically offers the fund and since this is done by professionals who have proper knowledge about the financial market, you can get a better return out of it.
In simple terms, buying a mutual fund is like buying a pastry out of the entire cake. The mutual fund owner gets his share from the gains, profits, losses etc.
How Mutual funds are managed? Which body regulates it?
The company that manages the mutual fund is known as Asset Management Company. This company in turn hires a professional money manager, who trades in securities to accomplish the stated objective.
All the AMC’s are regulated by the Securities Exchange Board of India (SEBI). It provides regulations and guidelines which all AMC’s have to adhere.
Benefits of investing through Mutual funds.
All the mutual funds regulated by SEBI, are managed by highly professional money managers. These money managers always have a bulls-eye on the market and as it is their primary occupation they devote more time compared to any other investor who is investing in stocks individually. When you don’t have enough knowledge, mutual funds provide a way where you can avoid the stress of calculating difficult financial ratios and even analysing the company’s financial statement.
Basically, by using mutual funds, “You are using an instrument of money-making and using your money to earn more money for you, even if you don’t have an experience of doing it properly.
How to start the journey of investing in Mutual funds?
Investments in mutual funds can be done with a few clicks on the internet. Basically, through an online mode, it can be through the website offered by the Asset management company or through various apps.
1. Investing through an official website of Asset Management Company (AMC).
Every asset management company offers its website. Through that website, you can invest in various mutual funds schemes by just following the steps and completing your e-KYC verification. For this, your Aadhar and PAN card is required.
2. Through Apps
You can get the details of mutual funds and can easily invest in it by installing some apps in your smartphone. Various apps are available which allows you to get the details about the various mutual fund schemes, your account statement etc. Investors have a plethora of options for investing in various fund houses.
Precaution before investing in Mutual funds
As mutual funds are subject to market risks, you must choose your investing instrument carefully before investing.
For any kind of financial investment activities, we recommend you to kindly learn about mutual funds and Systematic Investment Plan (SIP) in detail and if possible take the help of an expert professional regarding risks and returns. Because when it comes to investing, the only way to reduce the risk is to know the market in a better way from an expert.
