When an investor invests in direct equity and shares purchase, he is buying a share in a company and become a percent of the owner of the company. But when a beginner wants to invest, he tends to hire a mutual fund manager who is an agent. Mutual funds are a group or a company that performs as a middleman between the investors and the stock exchange.
Types of investment options in mutual funds
A mutual fund provides the investors with various options in which they can invest according to their Investment goals at their own pace. The broad types of mutual funds are-
- Growth funds-This is meant for those investors who are ready to take high risk for high returns. In this type, investors need to invest for a long time. The money is invested in stocks of a company like NYSE: ASGN at https://www.webull.com/quote/nyse-asgn where you invest in the share of Asgn Inc. company.
- Debt funds-In this, the money is invested in fixed deposits, government bonds and so the return is low but the risk is also low. If the investor wants, he can invest for a short term or long term of his choice.
- Balanced funds-Here the money is invested in debt bonds and equity so you get the returns depending on the inflation and deflation in the market. Here also the investors get short term and long term opportunities for investment.
- Money market funds-Here a major proportion of money is invested in deposits, treasury bills, etc. And so the risk is low and the return is also low. Here there is only short term Investment is possible.
Advantages of investing in mutual funds
The following are the benefits of investing in mutual funds-
- Professional management- The most important benefit of investing in mutual funds is that your investments are managed by experts. An experienced fund manager and his team continuously monitor various securities and economic variables.
- Liquidity- You can easily access your investment whenever needed. Your investment can easily flow from you to the stock market.
- Choice- You can easily find a scheme that matches your money requirement whether it is for the education of your child or buying a house.
- High returns- when you invest in mutual funds, you get more returns as compared to other types of investment. You can also extend your investment when needed and also can terminate when you want.
The mutual fund manager collects the investing money from different investors, invests them in the stocks and when the profit arises, the mutual fund manager keeps 2-3 percent of the profit as a commission and distributes the remaining profits among the investor based on the proportion of their Investment in investing account.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.