What is MUTUAL FUND.

  What is Mutual Fund.

We all have many options to invest our saving money; Mutual fund is also a medium for investors to invest.

Just as investors invest in any other type of investments, such as fixed deposits, recurring deposits (RD), and hope to make a profit on it after a certain time.

In the same way, Mutual Fund Investment is also an excellent medium of investment, where investors can make better profit by investing,

"We all want to make more profit by investing with less RISK.

And in such a situation MUTUAL FUND is seen as a high profit making profit in a low RISK .

It is worth noting that, like any other investment, there is some risk in the "Mutual Fund", and an investor must keep full information about all the risks associated with any investment.

Mutual Fund.

 What is MUTUAL FUND?

Mutual fund is made up of two words - Mutual and fund

The meaning of Mutual is - mutual, mixed, mutual relation.

And fund means - money (money collected together).

In this way MutualFund means - a lot of people were gathered together - mutual funds

Mutual fund is also called MF in short.

In this way, the money deposited from different investors is invested in the stock market and government or corporate bonds, etc., according to the objective and condition already stated in that mutual fund.

Mutual fund is an INVESTMENT system in which a large FUND is prepared by combining the money of many people together

And this FUND is invested by the manager of the mutual fund in a very well planned and diversified way, in different investment options,

And in this way the profit from the investment is distributed among all the investors in the proportion they have invested. 

 Also Read : What is IPO

Mutual Fund 

 HOW MUTUAL FUND WORKS.

Mutual Fund is a Unit Investment System

Mutual fund is a system of investment in which money is deposited, deposited from different investors, and units are given to the investors in exchange for the money deposited,

MUTUAL FUND UNIT AND MUTUAL FUND UNIT HOLDER

And thus a mutual fund investor is called a unit holder

A unit given to a mutual fund investor has a price, also called a mutual fund unit price.

And this unit price changes daily, which tells the profit or loss to the investor in the mutual fund.

Also Read : What is Share Market.

NFO- NEW FUND OFFER.

Any Mutual Fund scheme, when it comes to the public for the first time to invest in the scheme, is called NEW FUND OFFER.

NFO is an offer similar to the IPO of the stock market,

In NFO, investors are offered UNIT of MUTUAL FUND for a fixed PRICE,

For example, if SBI brings a latest mutual fund scheme, then KIM (KEY INFORMATION), SID (Scheme Offer Document) and leaflets can be found on its website.

Where all information related to the offer is available,

It is to be noted that, NFO also has a minimum investment AMOUNT, like -5000, or 1000 rupees,

And the NFO opens for a few days, and then becomes CLOSE,

Once the NFO is CLOSE, suppose

The company collected Rs 1 crore from NFO, and had a unit PRICE of Rs 10,

So in this way there are total units, 10 lakhs,

And if I put 5000 rupees in NFO, then I will get 500 units.

Now let's assume

That mutual fund invested its offer document in the manner described and after one year it has a profit of 1 crore deposited from NFO, 20 lakhs.

So in this way, the profit of 20 lakhs will be distributed among all the units,

And thus, in 10 lakh units, each got a profit of Rs. 2 per unit,

And after one year, I will get 2 rupees profit on the 500 units that I have, then my total profit will be-

500 X 2 = 1000,

And after 1 year, the price of one unit of that mutual fund will be Rs. 12,

And if after 1 year, a friend of mine wants to invest in the same mutual fund, then he has to invest Rs 12 per unit.

 MUTUAL FUND is a diversified investment.

The special thing about Mutual Fund is that, Mutual Fund invests the money deposited from different people in the stock market of different industries or sectors of different companies in the stock market, for the purpose of earning better and regular profit.

In order to make a profit by controlling the RISK of investing in the stock market,

The main purpose behind investing in different shares is diversification.

All stocks do not always move in one direction, sometimes some stock prices rise, then some stock prices decrease, and it always moves.

Now such a mutual fund, keeping in mind this basic FACT of the stock market, invests in the shares of a company from different industries or sectors, so that if the share price of a company decreases, then the stock of another company Stay fast.

The investment risk is controlled by the funds invested by thousands of investors in a mutual fund, by the manager of that mutual fund, in a planned and diversified way, and the investors are tried to get regular and better returns.