Today you will know the advantages and disadvantages of mutual funds, benefits and risks of Mutual Funds in Hindi. In this, information like meaning of mutual fund, information before investment, advantages, disadvantages, how to invest money is given.
What is Mutual Fund?
In the recent past, the Indian economy has seen a significant decline due to the pandemic. But with the passage of time, many reforms have also come in the economy.
On the one hand, where the economy has suffered, on the other hand there are some areas where a large number of investors are watching.
At present, if we talk about any famous investment sector, then the stock or stock market comes first. In fact, both the mutual fund and the stock market are integral parts of the market.
Through mutual funds, investors get profit by investing a fixed amount. Irrespective of the profession, the aim of everyone is to get maximum return from their investment.
In other words, a mutual fund is a fund that is made up of money from a number of investors with the aim of investing in different sectors to earn a possible profit.
Mutual Funds are similar to the stock market in many ways, but are actually very different. While on one hand the risk in the stock market is very high, on the other hand mutual funds are a very good option for long term investment.
The funds deposited in this are invested in different places in a safe manner. Fund managers or experts are appointed to manage the fund, who maintain their focus to invest in the market at all times.
Asset Management Company (AMC) operates many schemes like mutual funds. AMC It is registered under the Securities Exchange Board of India (SEBI), Government of India.
Types of Mutual Funds
There are many types of Mutual Funds. We can divide them into 2 categories. One is the types of mutual funds on the basis of structure and second the types of mutual funds on the basis of asset.
A. Types of Mutual Funds on the basis of Structure
– Open Ended Mutual Fund
– Close Ended Mutual Fund
– Interval Funds
It allows investors to trade funds at pre-determined intervals. And trading of funds can be done on that fixed period.
It was talked about the type of Mutual Funds on the basis of the structure, now we will talk about how many types of Mutual Funds are taken on the basis of asset.
B. Types of Mutual Funds by Asset
– Debt Funds
– Liquid Mutual Funds
– Equity Funds
– Money Market Funds
– Balanced Mutual Funds
These types of funds give investors stability in income on the one hand and on the other hand they also give impetus to income growth.
Apart from these funds, there are many types of funds, but these are the main and most used funds.
Are Mutual Funds Right or Wrong?
It is not easy to tell in a straight way that mutual funds are right or wrong. Because everything has two sides, but yes people have better opinion in favor of mutual funds. At the same time, whenever you have the turn to invest in mutual funds, then you have to understand that you should invest as much money as your ability.
Also, always do your own research before investing in any mutual fund. Don’t invest size in someone’s delusion.
Important things to know before investing in Mutual Funds
Before entering any investment scheme, it is very important to know about it thoroughly. However, mutual funds are less risky than the stock market. But even then, investors should take a decision only after taking complete information about it.
If you want to invest in mutual funds, then it is very important for you to know some important things about it.
Mutual funds are invested in slightly diversified fields, which include stock market , government bonds, real estate, securities, FDs, corporate bonds, gold, etc. The main purpose of distributing the funds in different places is to reduce the economic risks in the future.
Once the company is profitable, some part is kept by him and given to the maximum profit investors. Mutual Funds cannot be considered as a good investment scheme for the short term.
Although mutual funds are divided into several categories, the more popular types of asset class based mutual funds are equity mutual funds, debt mutual funds, hybrid mutual funds.
When investing in equity mutual funds, the investor’s money is invested in the stock or stock market. As mentioned earlier, long term investments in the stock market can yield a certain return. Investors can get a decent return by investing a maximum of 5 years or more.
The risk in debt mutual funds is very low. Funds under the scheme are invested in corporate bonds, government bonds, stock market, money market etc. Investors do not have any time bond in Mutual Funds.
Talking about the third or hybrid mutual fund, it can be said to be a mixture of equity mutual fund and debt mutual fund, in which the fund is invested in both these sectors.
Any person who wants to invest in mutual funds should have complete knowledge about all these schemes, on the basis of which he can take the right decision in investing.
Apart from this, the most important thing is that before investing in any fund, the investor should also evaluate its past performance well.
However, mutual fund companies claim that the future should not be compared on the basis of profits or losses of the past, as fluctuation can be seen in the market at any time.
Mutual fund investors should invest their money in any fund only after looking at the future returns. If you are going to invest in this fund for the first time and you do not have much knowledge in this area, then definitely take expert advice once.
Benefits of Mutual Funds Benefits of Mutual Funds
At present, mutual fund schemes are attracting a lot of investors. It is anticipated that in the coming time, more excellent mutual fund schemes will be introduced in the market, which will reduce the problems of investors even more.
In this article, we will tell you some of the best benefits of mutual funds, on the basis of which you will be able to invest in mutual funds easily.
1. Start investing with a small amount
The biggest advantage of mutual funds is that any interested investor can start investing in mutual funds with just ₹100. Even after investing a small amount, the funds are systematically handled by professional experts.
2. Safe Investment
As mentioned earlier, mutual funds are registered under SEBI, Government of India, then mutual funds can be considered a very safe investment as compared to various other funds.
Because the fund invested in mutual funds is regulated by the Securities Exchange Board of India, due to which the security of people’s capital also becomes the responsibility of the government.
3. Diversity in Investment
Under the various schemes of mutual funds, many options like shares, bonds, securities are available to the investors. Investors can invest their money in various sectors as per their choice.
Apart from this, different types of bonuses, securities, FDs, etc. can be bought in mutual funds according to the budget of the investor.
4. Best Option For Long Term Investment
Ups and downs in the market are common. Investing in Mutual Funds is a bit risky in the short term due to market fluctuations but the same long term investments in which the chances of getting more than 20% profit by investing for 5 years or more are much higher.
5. Ease of Money Withdrawal
The best thing about mutual funds is that investors can voluntarily withdraw money when needed. Such services are seen only in mutual funds, where investors are provided with the facility to withdraw money within a few days.
On the other hand, when talking about other funds, this process takes a long time for investors and till the time limit is not met, investors cannot withdraw their money. These services of mutual funds make it different and better than other funds.
Disadvantages of Mutual Fund Risks of Mutual Funds
So far we have learned about all the benefits of Mutual Funds. Even though Mutual Fund has become one of the most popular schemes in the market at the present time, but on the other hand it also has many disadvantages.
At times, investors have to take the risk in this, due to which a huge difference in returns can also be seen. Some of the disadvantages of mutual funds are listed below:
1. Uncertain profit
Just as investing in the stock market is a risky venture, mutual funds are also a high risk option to a large extent. Due to the volatility in the market, there can be a lot of variation in the returns of mutual funds.
On the other hand, there are many schemes in which investors are also guaranteed their returns, but this is not the case in mutual funds. It is very difficult to make profits for a short period of time but returns can be obtained after a few years.
2. Difficulty for New Investors
Mutual funds are one such field, in which technical knowledge is very important to invest. Investing directly in the market without any understanding can lead to huge losses for new investors.
If you enter the investment market directly in mutual funds without consulting an expert, the chances of losing money increase significantly.
3. Expense Ratio
By now you know that experts are appointed to operate mutual funds. Apart from investing in the fund, people also have to pay some extra charges, only after which the investors are included in the mutual fund.
If investors want to take advantage of mutual funds without paying any expense ratio, then it will not be possible for them.
4. No post-investment control
Investor in mutual fund can get information about his money, in which bond, security etc. he is invested.
But once the investor has put his money in this fund, he cannot decide in which sector his money should be invested. That is, the decision to invest in mutual funds is with the fund managers only.