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mutual funds investment can be classfied on the basis of asset mix...i.e, investing in assets like stock, bonds and cash in different proportion.....depending on the proportion on each of the above asset categories, a scheme can be equity oriented, debt oriented or a balanced (hybrid) scheme......
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What happens to the money put into an open mutual fund?
It gets invested in the stock market or in any investment class that the mutual fund is supposed to invest in. Ex: Debt Mutual funds invest in Debt instruments like bonds and Equity Diversified funds invest in Equity Shares etc
Are mutual funds insured?
No they are not. Mutual funds are stock market investments and hence they are not insured. There is always a possibility of an investor suffering a loss if the mutual fund house makes wrong investment decisions.
Is the investment of mutual funds risky?
Yes they are. Since mutual funds invest in the stock market they carry the same risk that stock market has. If the price of stocks tumbles due to some reason, the value of a mutual fund goes down and hence our investment worth also goes down. Certain type of funds like debt funds and balanced funds do not bear the brunt of a stock market collapse but they suffer losses too, during an economic crisis.
What is the difference between equity shares and mutual funds?
equity shares are stock market instruments that represent ownership. A person holding 10 stocks of XYZ limited owns a small % of the XYZ company. mutual funds are stock market instruments too but they invest in the equity shares that is explained above.
What makes a mutual fund an attractive investing option?
Because:They invest in the stock markets and the stock markets are one of the best investment instrumentsThey are operated/maintained by a trained and experienced fund managerThe investor need not track the movement of the stock market everydayIt gives comfort and investment diversification for the investor who is not well-versed in the stock markets but still wants to invest in mutual funds
Are mutual funds buy stock?
It depends. Equity diversified mutual funds invest in the stocks. Others might invest accordingly in other investment instruments.
Whats the need of investing money in mutual funds?
There is no mandated need to invest money in mutual funds. It is upto the individual to decide as to whether he wants to invest in them or not.Mutual funds are good investment instruments for investors who do not have the time or expertise to invest in the stock market but at the same time want to take advantage of the returns given by the stock market
What happens to the money put into an open mutual fund?
It gets invested in the stock market or in any investment class that the mutual fund is supposed to invest in. Ex: Debt Mutual funds invest in Debt instruments like bonds and Equity Diversified funds invest in Equity Shares etc
How do the various types of mutual funds differ?
Stock, bond, and hybrid funds invest in long-term securities, and as such are known as long-term funds. Hybrid funds invest in a combination of stocks, bonds, and other securities
Why mutual funds can be considered high risk?
No all Mutual Funds are high risk. MF's that invest in equities and stock market instruments are high risk because, the profit or loss created by the mutual fund is directly dependent on how well the stock market performs.
How do mutual funds work?
Mutual Funds work to invest in a type such as stock or bonds or sector with much less risk than investing in individual securities. Sources: http://www.amfi.com http://www.morningstar.com/
How do you choose a mutual fund?
A mutual fund is an investment vehicle with a well defined, easy to understand investment strategy and goals. People choose mutual funds that match their own financial goals in a diversified way. In many cases it is possible to match individuals investment goals with just one mutual fund. In other cases, people use several mutual funds. If many funds are bought, none of the funds is usually a strategy match by itself. It is the synergy of the funds that makes the trick. Mutual funds range by the security type: there are bond funds that invest in bonds, stock funds that invest in stock and blend funds that invest in both in a pre-determined proportion. Of these, bond funds are less risky and stock funds are most risky. At the same time, historically stock funds offer more attractive return figures. Therefore one needs to establish a financial strategy first. A financial strategy varies with goals, time-frames of investments. Balancing risk and return is key to achieve investment goals faster. Only after the strategy is established one selects appropriate mutual fund or funds.
Are mutual funds insured?
No they are not. Mutual funds are stock market investments and hence they are not insured. There is always a possibility of an investor suffering a loss if the mutual fund house makes wrong investment decisions.
Is the investment of mutual funds risky?
Yes they are. Since mutual funds invest in the stock market they carry the same risk that stock market has. If the price of stocks tumbles due to some reason, the value of a mutual fund goes down and hence our investment worth also goes down. Certain type of funds like debt funds and balanced funds do not bear the brunt of a stock market collapse but they suffer losses too, during an economic crisis.
How old do you have to be to purchase a mutual fund?
Most countries expect/mandate that you be at least 18 years old to invest in the stock market related products like shares and mutual funds
Is payment of a dividend a requirement of a stock corporation?
No, corporations are not required to pay dividends on their stocks. However, some mutual funds are designed to only invest in dividend-paying stocks, so some corporations pay a miniscule dividend in order that those mutual funds might buy their stock.
How do funds work?
Mutual Funds work to invest in a type such as stock or bonds or sector with much less risk than investing in individual securities. Sources: http://www.amfi.com http://www.morningstar.com/
