What is Mutual Funds in Simple Words 2021
What is mutual funds ? Most of the people are confusing mutual fund share market, Both are same. Actually mutual fund is completely different.
Share market is completely different.OK,
Working of Mutual Funds MF
just to think, what are the types of investing for available in India? First one land second one? Gold And third one is bank.
The banks are more genuine and be safe. The land and gold are somewhat safe. Fourth option is Mutual Fund.
Example. Bank and mutual fund are same concept, Mutual fund companies Same as the bank compant.
For example, if you are putting ₹10,000 in your bank mean they will give some profit amount. That is bank concept. Same as the mutual fund concept.You are giving money to MF But You will not take As your Wish.
This meaning is Ur account if you need money U simple withdraw from the ATM or Withdraw Slip.
But Here they will put some agreement for one year, six months, two years, five years. So many types of agreement are available.
If you give 10,000 rupees to mutual fund company meant you will not withdraw As ur Wish. Once the agreement will completed they will give money to u with profit amount.
It’s like 6 month agreement mean, After the six month you will get profit amount with you are invested amount.
What is Risk in Mutual Funds and Types
What are the types of risks are available and mutual fund? Totally three types of risk are available. First one is low risk- Second is balanced, 3rd one is High.
The low Risk mean u will get Low profit amount, Getting after the agreement get completed.
Balanced Risk is getting some extra money above of low risk. That is somewhat higher than the amount of low risk.
Finally you will get high profit for the High Risk scheme.
Risk is Based on What ?
And the main thing is how the risk is working on MF, The Mutual Fund Agreement is you are investing money To the company that company.
Company goes up mean ur profit amount get increase, they will give good Profit. If that company goes down mean, you invested money will be lossing. That is the mutual fund concept.
Share Market concept today you are buying shares,Tomorrow you think mean tomorrow will be sell at any time, but mutual funds are completely different.
You are investing money to the company, that is six months after the six months. Only you will get profit. Within the six months that company grows mean you will get more money. As well as within the six month that company reached the loss mean. You invested money will loss.
That is Risk in mutual fund.
Mutual Funds vs Share Market
Mutual fund vs share market which is best, I have ₹10,000 money. I have more time that is i ready to wait for 6 month mean, I’ll invested in mutual fund.
I don’t have any time but i need more profit with the short time mean go the share market.
Anytime u may buy and sell shares From tomorrow or next week or next month as ur wish.
Pros of MF
Returning money is high.
Long time investment will give more profit compare to short time investing of period.
Cons of MF
Have it mind, You need to focus on the Genuine company.
The period of time is more its like 6 month, 1 year and more.
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Conclusion: Just invest the money, Earn more money. All the best.