About Mutual Fund

                    
              
                      Hi Fellows,I am writing this article about Mutual Fund that how it helps to increasing a net worth of portfolio.An individual who is main income earner of family have many responsibility such as child education,child marriage and many more so one must have nice diversified portfolio by investing in mutual fund,equity share market,bond with proper asset allocation so it help to create a wealth in long term.

            Many of us aware the name of Mutual Fund. Mutual Fund is nothing but it collecting some amount of money in multiple of 1000(depends on Fund) every month from us and investing in share market in various sectors. Many mutual fund are their which gives better returns say for 5 year,3 year,1 year depending your holding period.
                  
             Basically,their are two type of Mutual  Fund;

• 1. Open-ended Mutual Fund.
• 2. Close-ended Mutual Fund.

Let us discuss both fund in short sentence:-

• 1. Open-ended Mutual Fund.:- it means that is available for subscription all through the year and is not listed on the stock exchange.Investor have flexibility to buy or sell any part of their investment at any time on Net Asset Value(NAV WILL EXPLAIN LATER IN LAST).
• 2. Close-ended Mutual Fund.:- it has fixed number of unit outstanding and operates for a fixed duration. The fund is open for specific period and mature at maturity period investor can't buy or sell at any time in between.

               

                  People thing Mutual Fund is not good for investing but they don't know that if all things are getting in one package than why should go for single package if the investment period is for long term. Mutual fund invest collect money from you and invest in various sector as per fund class see the below image.

                                        

If Mr A. is having 12000 Rs and want to invest in share market holding period is of 1 year and he invest in say for example XYZ company. share which belong to I.T. Sector now two possibility may happen one is that he will fetch a good amount of return or second thing he might loose is investment money. At same point of time Mr B. having same amount of investment money and same holding period but he select to invest in Mutual Fund,after one year he his sure that he might get atleast good amount of return because of allocation of fund class.

      Over a period of time people are not believing to investing their money in mutual fund and prefer to go with share market.I am not saying that share market is not good (DETAIL WILL BE IN NEXT BLOG).But if investor is Risk Averse than preferably not to invest in share market he may opt for MF or with other investment option.

     In Mutual Fund Value is considering by their NAV which means Net Asset Value it's calculated on daily basis at 8 p.m. It is calculated as total asset minus all expense and divided by the number of outstanding unit.

Conclusion:-

All Investment whether in shares,debenture or deposits involves risk. Stock price value may go down depending upon the performance of the company, the industry, state of capital market and the economy.However longer the term , lesser the risk and  vice-e-versa.while some of the risk can't be eliminated but skillful management can minimize risk. MUTUAL FUND help to reduce risk through diversification and professional management.The experience and expertise of mutual fund managers in selecting fundamentally sound securities and timing their purchases and sales help them to build a diversified portfolio that minimize risk and maximize returns. 

         

Thanks For Reading the article if any doubt you have about mutual fund than most wellcome.

Wealth creating line,

“Don't Gain The World & Lose Your Soul, Wisdom Is Better Than Silver Or Gold.”

― Bob Marley