A mutual fund is a professionally managed investment fund that pools money from
various investors to purchase securities. This money is then managed by a professional
Fund Manager, who uses his investment management skills to invest it in various
financial instruments. As an investor you own units, which basically represent the
portion of the fund that you hold, based on the amount invested by you. Therefore,
an investor can also be known as a unit holder. The increase in value of the investments
along with other incomes earned from it is then passed on to the investors / unit
holders in proportion with the number of units owned after deducting applicable
expenses, load and taxes.
Mutual funds are ideal for investors who want to invest in various kinds of schemes
with different investment objectives but do not have sufficient time and expertise
to pick winning stocks. Mutual Funds are considered as one of the best available
investment options as they are cost efficient, professionally managed and easy to
invest. Mutual Fund Investment also offers the benefits of diversification of portfolio,
liquidity and tax benefits. Mutual Fund investments are ideal for those who want
to grow their wealth over a longer period of time, avail tax benefits and enjoy
tax free returns on such long term investments.
Investment in Mutual Funds can be done in the following ways.
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Invest the amount one time.
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Systematic Investment Plans (SIPs).