You must have seen the advertisements for mutual funds on TV. But what exactly are they? Mutual funds raise money from companies’ investors and they invest this money in shares. It also takes charge from its curves and for those who do not know much about investing in the stock market, mutual funds are a good investment option.
How to invest in mutual funds?
One can invest directly from the websites of any public, private bank, or a firm of a mutual fund. If you want, one can also use the service of a mutual fund adviser who will plan and guide for investments. If you invest directly, one can invest in the direct plan of the mutual fund scheme. If you are investing with the help of an advisor, then one must invest in a regular plan of a mutual fund scheme. The advantage of investing in a direct plan of a mutual fund is that you do not have to pay commission. Therefore, your returns are greatly increased in long-term investment. One problem in investing in mutual funds in this way is that you have to do the research yourself. Here are few types of mutual funds –
Hybrid Mutual Fund Scheme
These mutual fund schemes invest in both equity and debt. While choosing these schemes, it is important for the investors to take care of their risk-taking ability. The hybrid mutual fund scheme is divided into six categories.
Solution-oriented mutual fund
This mutual fund scheme is made with a specific goal or solution in mind. These may have goals such as retirement schemes, higher education, or education of the child, and one needs to invest in these schemes for at least five years.
Debt Mutual Fund
These mutual fund schemes invest in debt securities and Investors can invest in them to meet short-term financial goals. It is okay to invest in them for a period of fewer than five years and these mutual fund schemes are less risky compared to stocks and give better returns than bank fixed deposits.
Equity mutual funds
These schemes invest the number of investors directly into investment shares. In the short term, these schemes can be risky, but in the long term, it helps you earn the best returns.