Build Your Wealth
Secure as your bank
Investment flexibility
Tax saving options
What are Mutual Funds?
Mutual funds are one of the most preferred investment options these days. A mutual fund collects and invests funds from thousands of individuals who have a common investment objective. They are managed by Asset Management Companies that provide various mutual fund schemes to the public. Each mutual fund can invest money in stocks, bonds, Government securities and various other listed and unlisted assets.
Mutual funds are a fantastic investment option for individuals as they can invest in different kinds of asset options without the effort to do the research. The returns generated from mutual funds are distributed proportionately to all the investors. Most AMCs have schemes designed to provide optimum returns to their investors.
Mutual Fund Investment Modes
Mutual fund investments can typically be made through several modes, depending on the convenience and accessibility desired by investors:
Direct Mode: Investors can directly purchase mutual fund units from the asset management company (AMC) or through their website. This mode typically involves lower expense ratios since there are no distributor commissions involved.
Regular Mode: In this mode, investors buy mutual fund units through intermediaries such as distributors, brokers, or financial advisors. The distributor earns a commission for their services, which is embedded in the expense ratio of the fund.
Online Platforms: Many online platforms and apps provide a convenient way to invest in mutual funds. These platforms often offer both direct and regular plans, allowing investors to compare different funds, track their investments, and manage their portfolios digitally.
Offline Channels: Investors can also invest in mutual funds through physical branches of asset management companies, distributors, or agents.
Systematic Investment Plan (SIP): This is a mode of investing in mutual funds where investors can regularly invest a fixed amount at predefined intervals (monthly, quarterly, etc.). SIPs are available in both direct and regular plans.
Systematic Transfer Plan (STP): Investors can transfer a fixed amount from one mutual fund scheme (usually debt funds or liquid funds) to another (usually equity funds) at regular intervals.
Systematic Withdrawal Plan (SWP): Investors can withdraw a fixed amount from their mutual fund investments at regular intervals. SWPs are useful for generating regular income from investments.
Dividend Reinvestment Plan (DRIP): Under this plan, instead of receiving dividends in cash, they are reinvested in additional units of the mutual fund scheme.
Each mode offers different features and benefits, catering to the preferences and investment strategies of investors.
Advantages of Mutual Funds
Cost-Effective & Affordability
Economies of scale lead to lower transaction costs, making mutual funds a cost-effective option for Investors
Professional Management & Expertise
Experienced Fund Managers make informed decisions optimizing returns & managing Market associated risks
Liquidity & Accessibility
Easy to buy and sell at Net Asset Value (NAV). It can be liquidated easily compared to other investments in the market
Diversification
Mutual funds spread your investments across various assets, minimizing risk and enhancing portfolio stability
Transparency
Regular reporting and disclosure offer transparency, providing investors with clear insights into their mutual fund holdings
Power of Compounding
Dividends & capital gains can be automatically reinvested, fostering the compounding effect for long term big returns
How to Select the Best Mutual Fund?
Before investing in Mutual Funds, you must have a clear and compelling idea of your financial goals for the future. There are a few other factors that you should keep in mind before choosing a plan.
You should always invest in any sector with an eye towards the future. Whether you are looking for a short-term profit or long-term benefit like a retirement corpus, you must be clear about your financial goals. Investing without a plan can lead to massive financial mismanagement. If you are a risk-averse individual, it’s better to go for less risky funds but provide decent liquidity.
Once you select the best mutual fund category, you should opt for the top-performing mutual fund in that category. Analyzing the returns over some time is the best way to know if that mutual fund would be beneficial to you or not. If the fund has shown better returns over five years, it could be the right choice.
Choosing the best mutual fund also depends on your risk appetite. If you have a high-risk appetite, you can choose equity funds that may provide you with higher returns. On the other hand, if you are a conservative investor who is wary of taking risks, it’s better to opt for a debt fund or a large-cap equity fund.
The higher the value of total assets in a fund, the chances for the returns are better. A large AUM (Assets under Management) also indicates investors’ trust in that fund and its performance.
Our Happy Customers Reviews
John Doe
Codetic
John Doe
Codetic
John Doe
Codetic