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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
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.
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 buy stock?
It depends. Equity diversified mutual funds invest in the stocks. Others might invest accordingly in other investment instruments.
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.
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 Demat account compulsory for mutual fund SIP Investments?
A demat account is necessary for stock market but not required for mutual funds including SIP. For investing in Mutual funds you need to submit your KYC documents. If you are interested in investing in stock market or mutual funds,
What are advantages and disadvantages of mutual funds?
Advantages: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 fundsDisadvantages:They invest in the stock market and so, if the market crashes, our investment value goes downIf the fund manager messes up then the investors money may be lost.
Are mutual funds covered by federal market insurance?
No. Stock Market Investments (Mutual Funds as well) are not covered by federal insurance. It covers only bank deposits
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
What is mutual fund and its type?
A Mutual Fund is an investment instrument wherein a capable and experienced fund manager would pool in money from investors and invest in the stock market on their behalf and share the profit with the investors. There are many varieties of mutual funds which include:Equity fundsDebt fundsMoney market fundsExchange Traded fundsMonthly Income PlansHedge FundsContra funds etc
