Learn and Invest

What are Mutual Funds?

Why to invest?

Mutual Funds as the name suggests is the fund formed by mutual pooling of money. But unlike other forms of investment the mutual funds do not remain a static or dead fund, rather diversifies and builds itself over a period of time through various investments and provides a dynamic return at the end of a specific period of time. Mutual fund is a representative investor of investor. It means that mutual fund invests on behalf of the investor. Investors do not pick the investment portfolio or investment methodology. On the contrary they chose a product set or a fund scheme which has been designed in a specific way to invest and behave according to the financial and market conditions.

Investors can invest directly in a mutual fund product or seek the help and advice of a consultant or advisor who would choose the apt mutual fund scheme based on several parameters. Equity Bag fulfills the role of an advisor. With the vast financial knowledge and expertise, Equity Bag takes into consideration the risk capacity, market conditions, exposure level of the investor and also the future earning potential to suggest the investment amount, duration and fund for the investor.

There are broadly four kinds of mutual funds:
- Equity Mutual Funds: These funds invest directly in the stock market. Hence the earning potential is huge but on the other hand the risks in such funds are also very high.
- Debt Mutual Funds: These funds invest largely in debt market and are for short durations. The risk factors are very less and returns are low.
- Hybrid Mutual Funds: Synonymous with the name, such funds are a mix of equity and debts and the risks and returns are moderate.
- Solution oriented Mutual Funds: Such mutual funds are chosen for a specific solution for the investor. For example, there are fund schemes that are aimed at and designed for retirement benefits of children’s education etc.

Investing in mutual funds must be keeping in mind financial considerations and need of the investor. Generally, mutual fund investment is a mid to long term affair. There are also funds which are designed only for a short period. Mutual Funds help the investor in making returns on their investment higher than other investment schemes. Equity exposures of mutual funds help the funds to grow at exponential rates in long term