HOW TO UNDERSTAND MUTUAL FUND EASILY IN 2021

 HOW TO UNDERSTAND MUTUAL FUND EASILY IN 2021

If you are a beginner and want to know about mutual funds then you have come to the right place. Most people are afraid of investing money in Mutual funds and they think mutual funds are very risky That's why most people save their money in the bank. But the bank always gives us only a 4% annual return. Due to which the value of our savings amount kept in the bank would be reduced. So we have to invest most of our money in mutual funds. Mutual funds can give us 04 to 30% annual returns.

Now I tell you all about Mutual funds, What are Mutual funds and. And how many types of Mutual Funds 

WHAT IS MUTUAL FUNDS 

Asset Management Company that manages mutual funds. That company would collect a lot of investors' money and invest in different places. And then keeping a small percentage of the returns gives a higher percentage return to the investors. Generally, we give our money to the asset management company and that company invests our money in different places. Mutual funds can give 4 to 30% returns annually. Depends on which mutual fund we have invested in? So Mutual funds with higher risk have higher returns and mutual funds with lower risk have lower returns.

TYPES OF MUTUAL FUNDS 

There are three types of mutual funds 

1.  EQUITY FUNDS 

2.  DEBT FUNDS 

3.  HYBRID FUNDS 

EQUITY FUNDS 

In this category of mutual funds, our money is invested in the stock market. Where the risk is high and the return is also high.

There are five types of equity funds 

1.  Large(Mid)(Small) cap equity funds 

2.  Diversified equity funds 

3.  Equity link saving scheme 

4.  Sector mutual equity funds 

5.  Index equity funds 

1.  Large-cap equity funds is a fund where our money is invested in the large companies 

Mid-cap equity funds is a fund where our money is invested in the middle company's 

Small-cap equity funds is a fund where our money is invested in small companies 

2.  Diversified equity funds 

In this type of fund, Our money is invested in different companies bit by bit.

3.  Equity-linked saving scheme 

That is a special kind of equity fund where you can save your tax. And there are higher risks and also higher returns.

4. Sector mutual equity funds

In this fund, our money is invested in such companies which belong the company large sector.

5.  Index equity fund

Those funds are not maintained by any fund manager. These funds would have been up and down below the value of Nifty and Sensex.

2 DEBT MUTUAL FUNDS 

In this category of mutual funds, our money is invested in government bonds. Where the risk is low and the return is also low.

There are three types of Debt mutual funds

1. Liquid funds 

2. Gilt funds 

3. Fixed maturity plan

1.  Liquid funds. 

There is such a fund where we can convert our invested money into cash at any time. And there is a very low risk in this fund. And in this fund, you can 7% return annually. 

2. Gilt funds

In this fund, over money is invested in government issues bonds. And there are zero risks in this fund. 

3.  Fixed maturity plan

This fund is like FD(Fixed Deposit) because, in this fund, Our money is invested for a specific time. And we cannot withdraw our money before time.

So that is the main type of debt mutual funds 

3.  HYBRID MUTUAL FUNDS 

This fund is a mixture of debt mutual funds and equity mutual funds. This fund is for those people who want to invest some of their money in a debt mutual fund and also some money in an equity mutual fund. 

There are two types of hybrid funds. 

1.  Balanced savings funds

2.  Balanced advantage funds 

1.  Balanced savings fund

In this fund, 70% of your money is invested in Debt funds and 30% of your money is invested in equity funds. 

2.  Balanced advantage funds

This fund is opposite to the balanced saving fund. In this fund, 70% of your money is invested in equity funds and 30% of your money is invested in debt funds.

So that's all information about mutual funds