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Mutual Funds in India

Mutual Fund is an instrument of investing money. Today, bank rates have fallen down and are usually below the inflation rate. So, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent sufficient to understand the intricacies of stock market. This is where mutual funds come to the rescue. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager to purchase a diverse selection of stocks or bonds.

Mutual funds are very easy and highly cost efficient to invest in. By pooling money together in a mutual fund, investors can buy stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to work out which stocks or bonds to buy. But the biggest benefit of mutual funds is diversification.

Types of Mutual Funds


Mutual funds have different structure and aims, which in turn enable us to classify them into various major categories. These categories are:

Types of Mutual Funds
  • Load Mutual Funds
  • No-Load Mutual Funds
  • Value Funds
  • Money Market Funds
  • Sector Mutual Funds
  • Fund of Funds (FoF)
  • Index Funds
  • Regional Mutual Funds