Mutual Funds 101 :

A Comprehensive Guide to Understanding the Basics?

?#mutualfunds are a popular investment vehicle that allows individuals to pool their money together and invest in a variety of securities. Mutual funds are managed by fund managers who invest the pooled money into?stocks, bonds, and other asset classes.

In simple terms, when an individual invests in a mutual fund, they buy a unit in the fund. The price of this unit is determined by the value of the fund's investments i.e., Asset Under Management(AUM). Since mutual funds invest in a variety of securities, their price is less volatile than individual stocks.

Types of Mutual Funds

There are various types of mutual funds to choose from, just like there are different destinations to explore on a road trip. For example, equity funds are like off-road adventures, where the risk is high but the potential rewards are greater. Debt funds are like a leisurely drive along the coast, where the returns are lower but so are the risks. Hybrid funds are like a trek through the scenic mountains, where the investment strategy balances both safety and growth. Let's take a look at some commonly found Mutual Funds types:

Equity Funds:?

Equity mutual funds invest in stocks of companies listed on the stock exchange. These funds are suited for investors with a higher risk appetite as the returns are dependent on the stock market's performance.

Debt Funds:?

Debt mutual funds invest in fixed-income securities such as bonds, treasury bills, and other debt instruments. Since these funds invest in low-risk securities, the returns are lower than equity mutual funds.

Type Here to read more...