What is Mutual Funds

A mutual fund is a type of investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, money market instruments, or a combination of these assets.

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Benefits of Mutual Funds

1. Pooling of Funds: Investors can contribute their money, as low as Rs. 100/-, to the mutual fund scheme, which is then managed by a professional fund manager or a team of managers.

2. Diversification: The fund manager uses the pooled money, as per the Investment Objective of the scheme, to buy a diversified portfolio of securities. This diversification helps spread risk, “Don’t Put your all Eggs in One Basket”

3. Professional Management: fund manager is responsible for making investment decisions, buying and selling securities within the scheme, and managing the portfolio in line with the scheme’s investment objectives.

4. Investment Objectives: Each mutual fund scheme has specific investment objectives, such as growth, income, capital preservation, or a combination of these goals. Investors choose funds that align with their own investment objectives and risk tolerance.

5. Net Asset Value (NAV): The NAV of a mutual fund represents the per-unit value of the fund's assets minus its liabilities. It's calculated by dividing the total value of the fund's assets by the total number of units outstanding. NAV is typically calculated at the end of each trading day.

6. Liquidity: Mutual funds provide investors a Tax efficient option. In a scheme when Fund Manager Buys or Sell the securities the Investor has not to worry about the Taxes. Investor as to calculate the Taxation when they repurchase the units

7. Taxation: Mutual funds provide investors a Tax efficient option. In a scheme when Fund Manager Buys or Sell the securities the Investor has not to worry about the Taxes. Investor as to calculate the Taxation when they repurchase the units.