Investing in mutual funds is the easiest means to grow your wealth, especially for the small investors. A mutual fund is not an alternative investment option to stocks and bonds, rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities. It is a well-diversified, low cost & tax efficient way of savings.
Different types of mutual funds are
- Equity (Growth)
- Debt (Income)
- Money Market (including Gilt)
- Balanced funds
Choosing a scheme of mutual funds can be decided by considering age, goals, risk aversiveness, asset allocation & timing of investment. There are debt or arbitrage funds for investment for a period of 1 day to 3 years, hybrid funds for a period of 3-5 years, equity funds for 7-10 years.
Mutual funds come with regular return schemes, less returns but growth-oriented ones and many more. Monitoring the investments made are not a high-end task now a days, because mutual funds are administered by the professional management. We can get the updates of the daily NAV (Net Asset Value). Subscribing & selling the fund units are also easy.