What is a Mutual Fund and How to Earn Money from Mutual Fund

 

Money is very important in all of our lives for sustenance, but it is not necessary that if we are earning good money today, then we will always keep earning, apart from this, there are many occasions in our family life when we need more money at the same time.

It can be like marriage, children’s studies or retirement when we stop working. It is not easy to keep adding money for such times.

What is a Mutual Fund and How to Earn Money from Mutual Fund

But you do not get any special returns by servicing in the bank, so people often look for such items by investing in which they can get good returns.

Mutual Funds

Mutual Funds are considered a good option for investing these days. But before investing in Mutual Fund – Mutual Funds, you have to understand what is a mutual fund, as well as what are its advantages and disadvantages – what can happen only then you can take full advantage of such schemes.

What is a mutual fund? – What are Mutual Funds

The Mutual Fund is a trust that collects large amounts of such investors. Investors who have an investment objective in the future.

After which this fund is invested in equities, bonds, money market instruments and other securities in the market. Every investor owns units. Represents a portion of the fund.

The income generated by this collective investment is distributed among all the investors in the right proportion.

But Mutual Funds – Mutual Funds also have different schemes in which you can invest according to your income, requirement. But it is very important to understand its risk before investing.

If the investor can afford more risk, he can invest in a midcap or largecap fund. Mutual Funds – Mutual fund is an open end and closed end facility so investor can choose one of these days as per his convenience.

Units can be issued at any time during the lifetime of the scheme in open ended investment. And this is why open ended schemes fluctuate like shares.

Whereas in close ended this does not happen. Subscriptions can be availed only once in a closed ended scheme. And its redemption can only happen after the minimum limit.

Advantages of Mutual Funds

  • People of any class can invest in it. Because a minimum of 500 to 5000 rupees can be invested in a mutual fund.
  • In Mutual Fund people can invest in different schemes according to their ability to bear the risk.
  • Mutual Fund’s savings help plan marriage, children’s education, retirement.
  • There are possibilities of good returns.

Disadvantages of Mutual Funds

  • Profit is never fixed.
  • The risk potential increases with the number of investments.
  • Investing without full knowledge of Mutual Fund can be risky.
  • Good returns are not possible on low investment.

Read Also: Share Market | What is the stock market and how does it work?

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