FULL FORM OF MFs
WHAT IS MUTUAL FUND
MFs stand for Mutual Funds. A mutual fund is is an investment instrument which pools in money from different investors and invest the collected amount in a set of different asset classes like equity,debt,foreign securities and gold. Mutual funds are becoming popular in India because of its various benefits. Mutual funds have attractive performance history returns higher than those earned on conventional instruments of instrument like banks,post office,PF etc. Mutual funds enables investors to create diversified investment portfolios with investment as low as Rs 500.Another reason which makes mutual fund a preferred choice among investors is the professional management of funds. A mutual fund is managed by a fund manager who is an expert and having adequate experience in the investment industry. This provides an assurance to the investors that their money is in safe and secure hand. Mutual funds are regulated capital market regulatory SEBI (Securities and Exchange Board of India) and AFMI (Association of Mutual Funds in India).
TYPES OF MUTUAL FUND
As per the SEBI, mutual funds can be broadly classified into three categories-1. Equity Fund
2. Debt Fund
3.Hybrid Funds
BENEFITS OF MUTUAL FUND INVESTMENT
1. Mutual fund allows flexible investment amount. A mutual fund investment can be started with an amount of as low as rupees 500 while there is no limit on the maximum amount you can invest.
2. Mutual funds are managed by professionals with a nominal fee of administration and management of a mutual fund scheme called Expense Ratio.3. Mutual fund provides a higher return compared to other saving investment like saving in banks in post office in PF. Mutual funds should be invest for at least minimum 3 years to get the better return.
4. Mutual fund investor to access a wide and diversify its investment portfolio that can include equity of varying market capitalisation as well as debt and money market instruments for and investment amount which can be as low as rupees 500.
5. Mutual fund provides systematic investment option. A systematic investment plan is a method of investing in mutual funds that allows investor to invest a fixed some amount in a mutual fund scheme at predetermined interval (daily,weekly, monthly, bi annually, or annual). SIP investment reduce the potential financial risk associated with a lump sum investment.
6. An equity linked saving schemes (ELSS) is a type of mutual fund which help an investor in getting a tax benefit in addition to the above mentioned benefits. An ELSS comes with a locking period of three years and every ELSS investment qualifies for a tax deduction of up to Rs.1.5 Lac under section 80C of Income Tax Act.
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