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What is a Mutual Fund?


 Mutual Fund is a diversified portfolio management system managed by proffesional fund managers.
 Money will be invested in different securities such as stocks, bonds and other assests.

 An equity fund would buy equity assets – ordinary shares, preference shares.
A bond fund would buy debt instruments such as debenture bonds, or government securities/money market securities.A balanced fund will have a mix of equity assets and debt instruments.

What is NAV?

NAV is Net Asset Value, every mutual fund(MF) scheme scale with NAV,
If you want to purhcase one share of a mutual fund, you can purchase at the NAV.
it is similar to a stock price, NAV is updated at the end of each trading session.

Types  of  Mutual Funds:

 1. Growth Funds
 2. Divedend Funds
 3. Balanced Funds
 4. Money Market Funds
 5. Tax Saving Schemes

1. Growth Funds :-
    Growth funds are good for long term investors, who ever keep on adding money for long term needs. At certain point of time investor got more returns mean to say he enjoyes his fruits.
  People will alway says growth funds follow rule called the classical theory of compounding.
Here no dividend payouts will be made.

 Top rated Growth Funds
 
  * ICICI Prudential Value Discovery Fund
  * Edelweiss Mid Cap Fund - Direct Plan

2. Divedend Funds :-

    Divedend funds like getting interest wisely, if you are tax payer and you want to save some tax parallelly you want get the money from you fund then Divedend funds are good option.

Top rated Divedend Funds

 * SBI Bluechip Fund

3. Balanced Funds

Some of the Balanced Funds

* HDFC Balanced Fund
* ICICI Prudential Balanced Fund
* Kotak Equity Savings Fund - Direct Plan

Key Note for Mutual Fund:

 MFs are likely to very high risk traded.
 MFs are very new in the financial market.
 MFs are the best solution for people who want to manage risks and get good returns.
 MF is Portfolio diversification.
 MF can be sell at any point of time except some of the schemes like tax saver schemes.
 MF investor can know their MF NAV value in current market.
 Profits or Loss equally distributted.
 There are more number of Schemes in market it is difficault to choose best fund for the investor
 It takes minimum 3 days to redeem your mutual fund and they will charge investiment management fees.
 It is better than bank fixed deposits, It gives lower returns and higher safety to the investor.

Investing Mutual Fund (Lump sum vs SIP ):-

investing in mf is an art,There are two primary ways of investing in a mutual fund one is lump sum means one time investment and
other is SIP(System investment Plan) is a recurring investment.
Investing money in systamatically is more prefferable than lump sum.
If you are investing SIP every month it makes you averaging your NAV, even when market conditions are bad.
if you brought at higher price ultimatley you will ended up with gains becuase of averaging NAV.
what happened when you invested lump sum and market went far down you will be end up with lose.

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