To begin with let’s understand why you should invest in Mutual Funds. So when you invest in mutual funds you see
your money grow over a period of time. Depending on how the companies, markets and economies perform, you will
eventually enjoy a return on your investment that might help meet your financial objectives and goals. Be it
starting a new business or preparing for your retirement, there is always a mutual fund scheme for you! But whatever
your goal be, remember that the right knowledge will help you in making the right choices while investing.
So what are Mutual Funds?
In the simplest words, it refers to a pool of money gathered from people with similar investment objectives that are managed and rolled into the markets in the form of bonds, government securities and stocks.
Mutual Funds are essentially of 3 kinds:
1. Equity Mutual Funds - Your money is primarily invested in stocks of large, mid or small-sized companies based on their market capitalization. The risks and return on investment may vary from high to medium to low.
2. Debt Mutual Funds - The money is invested in fixed income instruments like Government or Corporate bonds, Corporate Debt securities with limited returns and lesser risks than Equity Mutual Funds.
3. Hybrid Mutual Funds - Your money is invested by strategically distributing it in both Equity and Debt to enjoy the benefits of both worlds.
Now that you know what Mutual Funds are, let me tell you what are the benefits of investing in them.
1. Liquidity - Mutual Funds are considered to be a liquid investment option because you can sell your Mutual Fund units and receive the money within a few days. You may not be able to do the same with other investment options.
2. Diversification - When you invest in a mutual fund, you are investing in multiple companies, and this by default spreads your risk. As the value of all the companies, the fund is invested in may not fall or rise at the same time and in the same measure, your investment is protected from high levels of volatility. Unlike investing in individual companies, Mutual Funds by default, offer an option for diverse holdings. That’s how diversification makes Mutual Funds one of the better options to invest your money in.
3. Affordability - You can start your investment journey with as low as INR 100. Your returns will be proportional to your principal amount, but you will make proportionate profits with efficient investment planning.
4. Professional Management - How does the market function? How will you know what is happening to your money? How can you track its movement? What if you invested in the wrong stock? What if you missed withdrawing your investment in time? A lot of these questions can be overwhelming. Mutual Funds are managed by a team of experts who have the experience and expertise to make the right investment decisions. This professional management of your investments helps you not protect your investment, but grow it in a prudent manner.
The benefits of investing in Mutual Funds are multifarious. But to understand the benefits of investing in mutual funds, you have to understand the idea of investing in general.
When we earn money, we spend a portion, we save the rest. Instead of keeping the money you save idle in your bank account where it might not grow much, you can invest in financial instruments like Mutual Funds.
With the right knowledge, every investment can be a smart investment, even in a risky market. Also, the right information about how Mutual Funds function will help you make the right financial decisions.
So how about beginning your investment journey now?
Visit www.icicipruamc.com/note to know
more about the process to complete a
one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered
Mutual Funds, details of which can be verified on the SEBI website https://www.sebi.gov.in/intermediaries.html For any
queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations
Officers. Additionally, investors may also lodge complaints on https://scores.gov.in if they are unsatisfied with the resolutions given by
AMCs. SCORES portal facilitates you to lodge your complaint online with SEBI and subsequently view its status.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.