You are young right now, you have a job that is paying you enough money to fulfill your needs, you have a fixed day on which salary is credited into your bank account and you have a fixed schedule of 9-6.
But one day you will turn 60 and you will have to retire, then there will be no job, no fixed day of salary, Sure you will have your kids to look after you, but they would also have their families by then and like every other person they will also have expenses of their own, they will be able to satisfy your basic needs but don’t you deserve a long vacation after 40-42 years of working hard every single day, Where will you get the money for all that? Have you thought about it?
Well there’s a solution for all this, Mutual Funds.
What are Mutual Funds?
You might have seen the advertisements for mutual fund on television or have heard about it over the radio, but do you know how mutual funds work? Sit back and relax we are going to tell you all about it.
When a large number of people/investors, provide their money to a Trust/organization which invests in various securities available in the market like Shares, Bonds etc. The investors hold units of these securities purchased and get the income generated from these securities proportionately on the basis of their holdings after deduction of various expenses.
You should start investing in mutual funds right from an early age, while you are young and have very less liabilities/expenses and willing to take risks.
Before investing in mutual funds, you should know about the various types of funds that are available in the market, so you can choose the best investment fund as per your requirement.
Equity Funds- these are the investments linked to purchase of shares of a company. The trust invests in shares of large company, medium sized company, small company etc. these funds are considered best for higher returns on investment and long term benefits but are equally risky as well.
Debt funds- These are fixed income generating funds like government bonds, debentures, commercial paper etc. they are relatively safer than equity funds and are optimum for income generation. Debt funds are considered as the best option for retirees as they have lower risk and high stability for a fixed income.
Hybrid funds- as the name suggests, this is a combination of both equity and debt funds which result in both growth and income generation. Examples of these funds are child plans, monthly income plans, balanced funds and pension plans.
Note- Consult a professional before investing in any type of mutual funds to avoid mis-conception.
Mutual Fund investments are subject to market risks, Read all Scheme related documents carefully.