A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective.
Open ended funds
An open-end fund is a diversified portfolio of pooled investor money that can issue an unlimited number of shares. The fund sponsor sells shares directly to investors and redeems them as well.
Close Ended funds
A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund.
An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds.
A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds.
Real asset funds
Real assets are physical assets that have an intrinsic worth due to their substance and properties. Real assets include precious metals, commodities, real estate, land, equipment, and natural resources.
Hybrid funds are mutual funds or exchange-traded funds (ETFs) that invest in more than one type of investment security, such as stocks and bonds.
Income funds are mutual funds or ETFs that prioritize current income, often in the form of interest or dividend paying investments.
A sector fund is a fund that invests solely in businesses that operate in a particular industry or sector of the economy. Sector funds are commonly structured as mutual funds or exchange-traded funds
Systematic Investment Plan (SIP) Best way to invest
Invest in mutual funds through SIP or learn about advantages of investing through SIP.
What is SIP?
Systematic Investment Plan, commonly referred to as an SIP, allows you to invest regularly a fixed sum in your favorite mutual fund schemes. In SIP, a fixed amount is deducted from your savings account every month and directed towards the mutual fund you choose to invest in.
Why Invest in SIP?
There are many reasons as to why investors prefer investing in mutual funds through SIP, the benefits of SIP are listed below:
Rupee Cost Averaging: SIP investments facilitate a phenomenon called Rupee Cost Averaging.
Minimizes risk: Investing small amounts on a monthly basis rather than one large amount at once means that the investments can be stopped at any time the investor desires.
Compounding: Earnings in a mutual fund scheme invested through SIP are added back to the investment itself, thus increasing its value.
Budgeting: The importance of proper periodical financial planning cannot be understated. Many would-be investors earn more than enough to invest and multiply their wealth, but because of inadequate financial planning, don’t save enough to invest.
Financial discipline: By establishing that an investment has to be made every month, a person can establish financial discipline. This is nothing but being disciplined and attentive when handling one’s money – a trait that is, by and large, lacking in modern India.
Convenience: There is no reason for investors to go out of their way to invest in SIPs. The amount is automatically deducted from the investor’s bank account at a particular date every month.
Frequently Asked Questions.
you are short on cash to make a lump sum investment or if you want to reduce your risks you can choose an SIP. Also, an SIP would bring in discipline, which helps you to make logical decisions instead of succumbing to greedy impulses.
There is nothing like a good timing when it comes to investments.It’s more about what you need from that investment. In an SIP, you can automate your transfers, and be hassle-free about the date in a particular month.
To begin investing in mutual funds through SIP, one must assess his/her financial goals and the time in which those goals must be achieved.
SIP investments can be as low as ₹500 and as high as the investor wishes.
Just choose the investment in which you want to invest and you are ready to start. One primary thing is that you have to fill your KYC documents before investing.
Make Small Investments for Bigger Returns
Best option for monthly savings.