lump-sum payment and SIP. An understanding of the features of different types of mutual fund schemes will enable investors to take informed decisions. If you are not willing to take higher risks, then debt funds should be your number 1 priority. 1) Equity Funds As mutual funds differ in types, it gets quite challenging for investors to pick the right type of investment funds and kickstart their investment careers. As it is the only source, Are you scared of investing in mutual funds? If you want your money to grow rapidly, then equity funds are the best pick! The money is collected in different asset classes namely equity shares, debt, gold, foreign securities, and the list goes on.

For example, you can fix monthly, quarterly, or weekly mutual funds investment option where a specific amount set by you will be deducted from your bank account automatically. Monthly Income Plans (MIPs): Monthly Income Plans (MIPs) do not guarantee a monthly income, but strives to provide a regular stream of income. As the name implies, hybrid funds are the special mutual fund’s type where the money is invested in either two or more than 2 securities. The returns from index MF schemes are comparatively lower. Ideal investment horizon is medium to long – term period ( 3 – 5 years ) or more, though the units can be redeemed at any time at the prevailing NAV. You can expect up to 7% of ROI in investments. The close-ended fund includes some stipulated maturity period. As they have a shorter maturity period, they carry the least amount of risk.

These are considered high-risk funds but also tend to provide high returns. Equity Funds (or Diversified Equity Funds): These schemes invest in the stock market and are the most popular kind of MF schemes.

If you choose the latter, you get a chance of starting your investment with as slow as Rs 500/- in your investment account.

But before we get started, let’s have a quick look at the meaning of mutual funds investment. Your email address will not be published. This type of fund has some risks as well. 4) As soon as the fund house gets SEBI’s approval for the launch of the new mutual fund investment product, they introduce it in the market. The returns on schemes will not be as fluctuating as the other funds, however. Debt Funds:  The objective of MF schemes under debt funds is ensuring a steady and regular stream of income to investors by way of dividends. The fund management company offers to repurchase units from existing unitholders during these intervals. How Empaths Become The Narcissists’ Narcissists, Rich, Please: How The Pleas Of India’s Wealthy Seem ‘Fake’ To The Masses. One of the most popular debt fund investment options is liquid funds. Click on Closed End and Open End Mutual Fund schemes. They can then sell or buy the scheme’s units on stock exchanges with the lists given alongside the units. The remaining amount ( 10 – 20%) gets invested in equities  that ensures higher returns. Whether it is a beginner or professional investor, mutual funds seem the most reliable and secure option for investment. Hence, the tax is deducted at source and is paid by the mutual fund. The minimum amount you need to get started with the mutual fund’s investment is Rs 500 whereas the maximum limit is not available.

The details of different schemes are as follows: Equity Funds ( or Diversified Equity Funds ): These schemes invest in the stock market and are the most popular kind of MF schemes. The expense ratio can vary from 0.5% to 1.5%. Liquid funds happen to be income funds but their aim is basically offering easy liquidity. SEBI has introduced 16 types of debt funds. Not only are they less risky, but debt funds offer a maximum rate of returns to the investors. Mutual fund houses reveal the rate of returns in each mutual fund scheme after deducting the expense ratio. Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. The investors can also invest in such a scheme during the time of some public issues. They carry a fixed tenure ranging between  less than a month and  a few years.

The demand for mutual fund investments is increasingly popular in this digitalized world. Open-ended Fund/ Scheme: An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. This type of scheme can be invested in with fixed income security like corporate debentures, bonds, and other options. Another famous type of Mutual fund is debt funds, where a major portion of the money is invested in money market securities and debt. One key point to note here is that it happens to be a scheme that includes liquidity. You might need to invest funds for as long as 5 years if you want to receive the maximum perks.

Investments in mid-caps and small caps  carry higher risks with potential to offer higher returns. Now that these funds are associated with lower risk, they offer a comparatively lower rate of returns than equity funds. As a matter of fact, the NAVS can rise or fall with regard to the index’s rise or fall.

It is the perfect option for you to, Before starting why is it important to know the organisation structure of mutual fund? They also focus on the preservation of moderate income as well as the capital.

For example, if you choose a hybrid funds investment option, you can minimize the risk while increasing the chances of higher returns.

These are then declared regularly. The profit is distributed amongst investors as dividend or it gets added to the assets of the mutual fund, which increases its NAV. GILL BROKING – SEBI REG INZ000168338 | CIN NO. For example, they may invest in banking stocks or pharmaceuticals or infrastructure. As a matter of fact, the scheme offers a wide range of options to investors such as capital appreciation, dividend options and more. The reason is fair and simple – these schemes always invest in equities as well as fixed income securities in proportion that is indicated in the documents. Furthermore, this plan allows you to modify the monthly payment amount according to your financial condition. On the contrary, your risk is lowered as the portion of your money is also invested in debt funds. Debt Funds is a reliable and secure form of investment option for investors with low-risk appetite. In fact, all your investments are managed by professionals who possess years of experience in dealing with investment instruments. However, they are far better than fixed deposits and other traditional investment instruments. This is because the growth of the companies takes years. They also take into consideration the pros, risks, and drawbacks of the new investment products and analyze if the same can outperform the existing investment plans. The frequency and value may vary from scheme to scheme. SIP allows investors to choose the interval period as well as the amount they want to get deducted at each interval. CHECK OUT THE SOLUTIONS, LEARN THE TIPS TO SELECT THE BEST MUTUAL FUND. A lot of investors consider the ELSS (Equity Liked Saving Scheme) investment plan to avail of tax benefits. No worries for refund as the money remains in investor's account. The NAVs of debt funds witness lesser volatility.

Investors trade stocks in the stock market. While there are a wide range of mutual fund schemes, it becomes fundamental to choose the one that’s appropriate and effective for you. Depending on the investment plan you choose, mutual funds allow investors to build their investment portfolio for Rs 500 and get started with the investment procedure. No need to issue cheques by investors while subscribing to IPO. One who invests in this fund can sell and buy the units conveniently at a related price (which should be NAV-based).

Another major advantage of mutual funds is that it is handled by professional fund managers, who possess years of experience in managing financial profiles of the investors. But most prominent among them can be grouped under eight mutual fund schemes. Equity funds are the most reliable option for investors who are ready to bear significant risk in order to obtain fruitful results. The government chargers dividend distribution tax (DDT ) on the dividend announced by debt mutual funds. And these funds also get affected due to fluctuations in the shared prices in stock markets. Index funds are also known as passive funds as changes (buying and selling of shares) happen only when some company is dropped from the index and replaced with another company. But to speak simply, the loyal investors should not bother with these fluctuations. Selection of scheme must be linked to the risk profile of the investor. Since debt is less volatile than equity, FMPs normally meet the interest projections. Sectoral funds: These schemes too invest in the stock market. You won’t be able to redeem money before the ELSS reaches its maturity period. The investment goals that you have in your mind are dependent on the choice of mutual fund schemes. For example, if you select a 500/- per month investment, this amount will be debited from your bank every month automatically. MIP’s invest around 80% to 90% of their total funds in debt securities comprising of bonds, debentures, government securities to ensure safe, regular returns. These scheme to follow the objective of equity funds ie to buy low and sell high, but by investing only in companies belonging to the  specified sectors.