A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI), that pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money markets etc., and distributes the profits. In other words, a mutual fund allows an investor to indirectly take a position in a basket of assets.

Why invest in mutual fund?

Good Investing generally requires a good knowledge about the market, economics, world politics and a lot of experience etc. Most people who want to invest their money, do not have the time to follow and learn all these things. For them >b?“Mutual Funds” are the best option. You do not have to worry about anything when investing in Mutual Funds. You just have take out the money for investing. The Mutual Fund managers are people who will do all the work for you and make your money grow!

The actual process of investing in mutual Funds is also quite easy. You do not have to do anything except for write a cheque and give it to the mutual fund company. You do not have the hassles of using a “broker” or a “demat” account or anything.

Besides this, there are certain mutual funds that will “really” help you in your financial planning. There are certain mutual funds that are designed to help you invest and accumulate money for your “big buys”! All in all, we highly recommend that you use mutual funds for investing, as you are probably a new investor.

Mutual Fund Popularity In India

How to invest in mutual fund?

There are many different kinds of Mutual Funds. Instead of trying to figure out what is good for you what is bad for you etc, you should get yourself a good mutual fund agent! You just call one of these agents up and tell them you invest in mutual funds. They will help you out with everything that you need to know. You just have to tell them what kind of “financial aims” you have and they will come up with a whole plan for you to reach your “financial aims”!

What are the risks involved with Mutual fund?

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or ""loads"" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you fore go management risk, because these funds do not employ managers.

Recommended Resources on Mutual Funds In India

Comon Sense on mutual Funds by John C. Bogle

""Jack Bogle is one of the great pioneer/visionaries of the investment business. In this book, he shares his knowledge, experience, and judgment to enable us to become better investors. The final philosophical chapters provide insights that may help some of us become better people."" -BYRON R. WIEN, Chief U.S. Investment Strategist Morgan Stanley Dean Witter

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