Latest News: A mutual fund is a company that invests other people's money by their consent into securities such as stocks, bonds and short-term debts.
Latest News: A mutual fund is a company that invests other people’s money by their consent into securities such as stocks, bonds and short-term debts. The interested investors buy shares in mutual funds.
The common types of mutual funds include:-
- Money market funds: They invest in fixed income securities such as government bonds, commercial paper and certificate of deposits. They are generally the so-called “safer investments”.
- Fixed income funds: They pay a fixed rate of return like government bonds and corporate bonds. When you aim that money should come on a regular basis, you should opt for this.
- Equity funds: Here, we invest in stocks. Although there is a chance that you can earn high amount of money, the risk here is the highest. Either you lose or you win. They invest in value stocks, large-cap stocks, mid-cap stocks, small-cap stocks and growth stocks.
- Balanced funds: They invest in equities as well as income securities. The formula here is to balance higher returns and risk of losing money.
- Index funds: They aim to track the performance of a specific index. Here, the value of mutual funds is directly proportional to index.
- Speciality funds: These mutual funds invest in mandates such as real estate, commodities or socially responsible investing like human rights and diversity.
- Fund of Funds: They aim to make asset allocation and make diversification easier for the investor. These funds invest in other funds.
A small tip here is that please understand the goals of the mutual funds you invest in. Even if two funds have a similar type, their risk level and characteristics may not be identical. According to the need decide what do u want and invest in.