Almost everyone in the country has heard the above line in advertisements.
Mutual funds are professionally managed funds that diversify the portfolio and aim to provide reasonable returns per the scheme's objectives. Mutual funds are available in various types per the investor's risk appetite and time horizon.
Here we will be looking into some facts about mutual funds.
Mutual funds are affordable, accessible financial products. Anyone can start investing with Rs.500 per month through a Systematic Investment Plan (SIP). The low minimum amount has made it easier for people to start investing a fixed amount every month.
Compounding is when interests or gains are reinvested to generate additional interest or gains over time. Compounding does its magic with consistent investment over the long-term period.
SIP is an excellent tool for beginners and young investors to start their investment journey. The magic of compounding occurs when the investments are kept untouched for a long time.
Mutual funds are the pool of funds deposited by investors that experts manage in the matter. Experts analyse the various investment opportunities and invest funds to create a portfolio to generate reasonable returns per the scheme's objectives.
Mutual funds are a great way to diversify your portfolio. Mutual Funds offer the incredible benefit of diversification by investing in different asset classes and sectors of a particular asset class. This helps to minimise risk.
Moreover, one can quickly redeem their money from their mutual fund folio and get it credited to the bank account.
Did you know that you can pledge your mutual fund units to get a loan from a bank?
Getting a loan against the units of mutual funds you hold is easy, and a few banks offer it to process digitally. The feature enables you to pledge assets for Mutual Funds online and get an overdraft limit in minutes!
By pledging your mutual fund units as security, you can avail loan against mutual funds, whether debt, hybrid or equity mutual funds, at any bank or non-banking financial company (NBFC). The benefit of a loan against Mutual Funds is that your units do not need to be redeemed prematurely. You can keep your systematic investment plan (SIP) unchanged.
The investment must be goal-driven, and by using the goal factor, you can decide the investment period. The same is the case with mutual fund investment.
So, if you have a short-term goal, you can invest in a debt fund per your time horizon. And, in the case of a long-term goal, you can invest in equity funds that have the potential to give good returns over the longer-term horizon.
Unlike investing in the stock market, you don’t need a Demat account to invest in mutual funds. When you complete the investment formalities, and the fund house opens a mutual fund folio where investment units and the investment amount are credited. When you redeem from mutual funds, the units and the investment amount gets reduced from your investment account.
Over the last decade, mutual funds have gained immense popularity in India among all people and investors. Mutual funds are the most favoured investment option for beginner and retail investors.
Mutual funds are a simple, accessible yet powerful tool to create wealth and reach financial milestones. Mutual funds allow investment in various asset classes per your risk tolerance and time horizon. Start your investment journey with a small step like mutual fund investing through SIP.
This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.
First Floor, C-39, Above Neuro Medical Centre, Near Kendriya Bhawan, Sector H, Aliganj, Lucknow, Uttar Pradesh 226024