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What is Mutual Fund [How does Mutual Fund work]

What is Mutual Fund ?

Mutual fund is one type of financial institution by which pool of money collected from several investors such as retail investors, institutional investors are invested in several securities like bonds, CDs, stocks and other financial instruments.
Mutual fund receives the pooled money collected from several investors, then fund manager of the mutual fund invests the collection of money in stocks, bonds, golds and in many other financial instruments.

Mutual funds is professionally managed by professional fund manager. The fund manager have lots of experiences in the field of investing.

You must invest in mutual fund

Mutual fund Definition : A mutual fund is an investment program managed by professional fund manager to invest the pool of money collected from investors in securities like bonds, stocks, golds and other financial assets. Mutual fund is an easy and simplified option for the people who want to invest their money in share market. Investors do not need to take risks to invest their money in share market as their funds will be professionally managed by fund manager.

Invest in mutual fund for your retirement goals

Mutual fund is a slow and steady growth option for the money, you want to invest in share market. Risks involves in mutual fund slowly finishes with time. The more time you give to mutual fund, the more benefit you will get and the less risk you will have to entertain. Invest in mutual fund for your retirement goals as you will nowhere find a better place than mutual fund.

What is mutual fund
Mutual Fund

How to Invest in Mutual Fund ?

Investing in mutual fund has become a very popular way of saving money in the form of SIP (Systematic Investment Plan).

Many of the Asset Management Company (AMC) provide either direct or regular plan for investing in mutual fund. Regular plans are those plan by which you invest your money (in SIP or lumpsum investment) through a broker. Direct plans are those plans in which you directly invest your money in mutual fund.

There are so many mutual fund service provider company such as HDFC Mutual fund, SBI Mutual Fund, ICICI Mutual Fund etc which provide mutual fund services. 

You need to open an account online or either by visiting to their branch and you need to choose a plan i.e. direct or regular, then you need to choose your investment options i.e. SIP or lumpsum investment plan. If you have opted for SIP then money will be debited from your bank account (you have filled the details with) every month on a particular date you have chosen. 

SIPs can be done monthly, quarterly, half yearly and yearly

List of Top 20 mutual fund

  1. ICICI Prudential Mutual Fund
  2. HDFC Mutual Fund
  3. Aditya Birla Sun Life Mutual Fund
  4. Reliance Mutual Fund
  5. SBI Mutual Fund
  6. UTI Mutual Fund
  7. Kotak Mahindra Mutual Fund
  8. Franklin Templeton Mutual Fund
  9. DSP BlackRock Mutual Fund
  10. Axis Mutual Fund
  11. IDFC Mutual Fund
  12. L&T Mutual Fund
  13. Tata Mutual Fund
  14. Sundaram Mutual Fund
  15. Invesco Mutual Fund
  16. Motilal Oswal Mutual Fund
  17. LIC Mutual Fund
  18. Mirae Asset Mutual Fund
  19. JM Financial Mutual Fund
  20. Edelweiss Mutual Fund

How does a Mutual Fund work ?

Mutual fund work in a very simple way. Assuming mutual fund as an investor, we can understand how it generates money for the investors. 

The money is generally generated by dividend income, capital appreciation, interest paid on debt instruments, interest paid on bonds, capital gains from gold etc.

Dividend Income
Capital Appreciation
• Interest Earned on Debentures.
• Interest Earned on Bonds

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