Many people tend to keep their money in their savings account or turn them into fixed deposits. These options do not offer high-interest rates, and hence don’t make any substantial profits. If you’re one of those people, it may be time to step out and look at different mutual fund investment options. Read on to learn more.

What is a Mutual Fund?

In a mutual fund, money is pooled from multiple investors and is used to invest in bonds, stocks, and other such financial instruments. Depending on the amount you invest, the profits or losses come back to you in appropriate proportion.
Many financiers like Bajaj Finserv offer Mutual Funds with multiple benefits like diversification facilities and a professionally managed portfolio.

Benefits of Mutual Funds

Here are the benefits of mutual funds, simplified:

Fight Inflation
Unlike money sitting in banks and drawing fixed interest, mutual funds give you better, inflation-adjusted returns.

Low Investment
You do not need large capital to invest in mutual funds. Start small, and grow steadily.

Professional Help
You will be happy to know that mutual funds are managed by qualified fund managers. For instance, financiers like Bajaj Finserv offer Asset Management Services to help better manage your funds.

Easy Liquidity
If you have chosen an open-ended scheme, then you can get your money back in a jiffy!

Regulated by SEBI
All mutual funds in India are registered with the Securities and Exchange Board of India (SEBI). This organization regulates and monitors each asset, thereby protecting your interests and providing you with complete transparency.

Mutual funds mitigate risk by giving you the freedom to invest in multiple assets. This ensures that you don’t have all your eggs in one basket!

Mutual Fund Jargon

You may come across some complicated financial terms that will make you feel both lost and scared. For a clear understanding of mutual fund investment plans, first understand the language of finance. Read More: Mutual Funds Simplified

Dividend payout means the money that an investor receives from the corporation of which they are a shareholder.

– Sometimes the corporation may retain some of the profits. The remaining amount goes out to the investors as a dividend. This fraction is called the dividend payout ratio.

– Dividend reinvestment means an investor forgoes the dividend in terms of cash payments and instead uses that amount to buy more shares in the company.

Types of Mutual Fund Investments

There are many different types of mutual funds. Here is a look at some of the most popular types:

Open-ended Funds
These funds do not have a fixed maturity date, allowing you to liquidate your capital whenever you wish.

Closed-ended Funds
When you invest in this fund, you will be notified of its fixed maturity period. You can’t liquidate your investment before the maturity date.

Income Funds/Bonds
The primary goal of income funds is to provide a steady flow of cash to the investors. If you wish to make a conservative entry into the world of mutual funds, then this is a good option for you.

Gilt Funds
These funds are specifically for government securities, which makes them safer than most other investments.

Balanced Funds
These funds combine features like capital appreciation, steady income and safety. Depending on your preferences, you can decide the percentage of capital that you wish to put into categories like equity and fixed income.

Liquid Funds/Money Market
These are short term investments with a duration of less than 91 days. They give you a moderate income while offering easy liquidity.

Equity Funds
This is the biggest category of mutual funds. It gives you a small income, but the focus is primarily on long-term capital growth. You can choose to invest in a wide variety of industries or narrow your list down to a few verticals.

International Funds
These are funds that allow you to invest outside of India. If the economy of a nation is doing better than your own, you may want to invest in that particular country.

This mutual fund investment advice will help you better understand the benefits of investing in such a platform. Check out the Mutual Funds offered by Bajaj Finserv, a leading NBFC, and choose a plan that suits your needs. Here’s how to apply for a mutual fund.

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