What is mutual fund?, mutual fund investment, what is the risk in mutual fund? 4 types of mutual fund, how to invest in mutual fund. Mutual fund how to invest. mutual fund example, how mutual fund make money,

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What is mutual fund?, mutual fund
investment, what is the risk in mutual
fund? know more about fund
investment.
04/12/2022 PRAVEEN KUMAR 0 Comments Edit
If you are also thinking of investing money and you don’t know where to invest the money and
how much to invest? How it will be safe. Then mutual fund can be good the option for you.
In this article we will know about what is mutual fund? How it work?. Is it right for investment
or traditional investment system is right like fix deposit or saving account etc.
Investment is such a process that everyone plans to invest, but very few people are able to take a
timely decision on it. In fact, there are so many questions in people’s has in there mind regarding
investment that it gets out of hand while searching for answers.

2. If you are also planning to invest in Mutual Fund but are problem by your own questions, then
today we have keep answers to these frequently asked questions in front of you. Read them and
take a decision before the right time to invest is over and build your future with your hard earned
money.
What is mutual fund and how to invest?
A mutual fund is a fund that is handled by an asset management company(AMC) in which this
company take money from a number of investors through sip or lamp sum and invests the money
in securities such as stocks, bonds and short-term debt. The investor is allotted units for his
money. This unit is called NAV.
Why Invest in Mutual Funds? Or what are the advantage of mutual funds?
Mutual Fund reduces the risk of investors and tries to give better returns. In mutual fund people
start with small amount with less risk like sip start 500 or lamp sum amount even this small
investment of yours is constantly monitored by a fund manager, who tries his best to make sure
that your returns are higher than the rest for higher return one theory people should understand
this is not short night game. This is long term process (10 to 15yre) which give better return as
compare short term.
Why Invest in Mutual Funds? or How to invest?
Why invest in mutual funds? This question rise first in everyone mind. You know that every type
of investment more or less risk, and the return on investment depends on the amount of risk you
are taking. Often in the greed of high returns, people lose their huge amount, while some people
do not try to get better investment due to the fear of losing money and invest money in traditional
investment options, which often become a deal of loss in rising inflation. Mutual Fund reduces
the risk of common investors and tries to give better returns. People can start investing in mutual
funds with a small amount of money with less risk and even this small investment of yours is

3. constantly monitored by a market expert or fund manager who tries his best to make sure that
your returns are higher than the rest.
3 Types of Mutual Funds
To invest in mutual funds, it is important to know a lot about its facts. This is the most important
thing, it is very important to know that there are many types of mutual funds. Mutual Fund funds
can be combined in three different forms from the point of view of payment of funds –
1. Open End Fund
These types of Mutual Funds are the best in terms of fund liquidity. These funds are available to
the investor for purchase and sale throughout the year. These funds can be bought or sold directly
from the mutual fund company at any time of the year on the basis of Net Asset Value (NAV).
The main reason for this, subscription and redemption of these funds can be done at any time.
Due to the non-fixation of the maturity date of these funds, this liquid cash is available with the
investor in the form of Liquid Cash.
2. Close End Fund
Redemption of this type of fund can be done only on the basis of a fixed date – this date can be
from 3 to 6 years.These funds are available for application for a fixed period of time shortly after
launch. These types of funds are listed on the stock exchange and once fully subscribed, they can
be bought and sold on the stock exchange at any time.
3. Interval Fund

4. These funds come with a combination of advantages of open and closed end funds. These funds
are traded with the help of stock exchanges and are available for sale or redemption at
pre-defined intervals based on the prevailing Net Asset Value (NAV).
Four Mutual Fund Investment Scheme
From the point of view of investment, Mutual Funds can be divided into the following five parts.
Various Mutual Funds come out with similar schemes:
✦ Equity or Growth Fund
Investors who are desirous of long-term capital gain or growth and are fully aware of the
profit-loss of market risk, want to invest in this type of fund scheme.In this scheme, the entire
money of the fund is invested in the equity shares of the market. In this scheme both profit and
risk are maximum.
✦ Debt or Income Mutual Fund
This scheme is best for those investors who want to earn maximum investment income without
taking any risk.
Funds collected under this scheme are invested in corporate loan scheme and government loan
scheme. The return of the money invested in this Mutual Funds fund is almost guaranteed and
the risk is very less.
✦ Balanced Mutual Funds
Equity and Debt funds have a mixed advantage in Balance Fund scheme.Funds collected in this
type of fund are invested in both equity and debt. In this scheme, the fund manager invests in the

5. equity market keeping in mind the ups and downs of the investment market so that investors can
be given the opportunity to earn maximum income.
These types of funds on one hand give stability in income to the investors and on the other hand
they also get the benefit of capital gains.
✦ Liquid Funds
This fund is best for those investors who want to earn investment income safely in the shortest
possible time.
Under this scheme, investment managers invest funds in schemes like Certificate of Deposit,
Treasury and Commercial Paper etc. available for a period of 91 days or less.
Due to the easy redemption of investment, this scheme is the best investment tool for corporate
and private investors.
✦Glit Funds
This fund is considered the safest because the money collected in this fund is invested in
government schemes. Due to the cooperation of the government system, the investors’ funds are
considered completely safe in these schemes.
Risks of Investing in Mutual Funds
It is very important for you to keep some things in mind before investing in Mutual Funds.As
you know that investment in Mutual Funds is done in various Shares, Fixed Deposits, Securities
etc. available in the market.In which asset to invest, its decision is taken on the basis of the
purpose of your investment and Mutual Fund Scheme.

6. Investment market completely depends on external factors like government policies, consumer
interest and trends of products and services.
Today if the price of a share is high, then tomorrow it may also be less due to some reason.
Therefore, investing in Mutual Funds may face the following risks.
Due to the diversification of investment under Mutual Funds scheme, risk and profit become two
sides of the same coin. Since mutual funds invest in different types of securities, there is a risk of
loss as well.
Lack of control
By investing in Mutual Fund, you do not have control over what type of Share, Debenture or
Securities etc. your money will be invested in because it is decided by the Fund Managers of
Mutual Fund.
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