Mutual funds are becoming a popular choice for investors and many people around you may be investing in this way. Before you hop on the investment train, it’s important to educate yourself about mutual funds and how to make investments through them. As with other channels of investment, you can look into investing in mutual funds online. This form of investment provides a wide range of opportunities, so no matter your attitude towards risk, investing in mutual funds can be simple.
What Mutual Funds Are?
You can buy mutual funds, like many other investments, online. Mutual funds are pooled investments created by various investors who contribute to a corpus. Fund managers, who are professional financial experts, manage the fund and make decisions on which assets to invest in. The investment goals of a mutual fund determine where the money is invested; for long-term wealth creation, stocks and securities of large firms (called large-cap funds) may be used. With mutual funds there’s the opportunity to diversify an investment portfolio and meet individual needs.
Purchase Mutual Funds Online - Know the Types
Here are the major types of mutual funds that you can invest in before you go ahead and buy them online:
Debt Funds – Mutual funds that fall under this category are typically income funds. In essence, debt funds earn profits by investing in fixed instruments such as bonds, government securities, and debentures. Due to the stable nature of the assets, this fund can guarantee a steady income return.
Equity Funds -If you buy mutual funds online, you will see that equity funds are growth funds that primarily invest in the equity market. In this case, the main objective is to increase the value of the capital. Investing in these funds is risky, but with a long-term investment, you can expect a high return.
Tax-Saving Funds – Also known as ELSS, these funds help you to save taxes. If you invest up to Rs. 1,5 lakhs, you get tax deduction benefits. It comes with a lock-in period of 3 years, so it may be a better choice for long-term investors.
Retirement Funds- These funds collect wealth with the aim of providing regular income (a pension) to investors after retirement. These funds have at least five-year lock-in periods.
