Why investing in mutual funds is important?

What are mutual funds? How to invest in mutual funds? Are mutual funds safe?

Do these questions bother you? Do you always find yourself silent whilst others are discussing investments and mutual funds? If yes, then you have certainly reached the right place. Let us learn the basics of mutual fund investing through this article!

What are mutual funds?

Investors have basically two choices: either they can invest directly in individual securities, or they can invest indirectly through a financial intermediary. A mutual fund is a type of financial intermediary that pools the funds of investors who seek the same general investment objective and invests them in a number of different types of financial claims (equity shares, bonds, money market instruments). These pooled funds provide thousands of investors with proportional ownership of diversified portfolios managed by professional investment managers. The term ‘mutual’ is used in the sense that all its returns, minus its expenses, are shared by the fund’s unit holders.
Investors can invest through SIP (Systematic Investment Planning) where investment can be done monthly of a prefixed amount or through lumpsum. There are various parties involved in creating and managing a mutual fund scheme and there are various types of schemes available to invest in, for which you can refer our other articles in the blog section.
It is important to understand that an investor can lose money in a mutual fund. Though regulations ensure disciplined investments and ceilings on expenses that are charged to the unit holders, unit holders assume investment risk, including the possible loss of
principal, because mutual funds invest in securities whose value may rise and fall.

Benefits of mutual fund investing:

• Professional investment management
• Risk reduction through diversification
• Convenience
• Availability of alternative portfolio objectives and products
• Unitholders account administration and services ensuring the
• liquidity of investment
• Lower transaction and other costs
• Regulatory protection
• Potential for higher returns than some other financial instruments, with corresponding risks.

Mutual fund investing with EquityBox:

We explain each scheme’s features, costs and risks, so that clients understand where their money would be invested before they decide. You can invest through a SIP or a lump sum. Mutual fund distribution is carried out by Vedansh Wealth LLP, an AMFI-registered mutual fund distributor (ARN-255613).