Mutual funds in India The Growing Avenue

Article Written By: jiten

Mutual fund is nothing but a financial intermediary wherein a common pool of savings is created by a number of investors with predetermined investment objectives and is an ideal product for an individual investor. Putting simply, it is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments may be in shares, debt securities, money market securities or a combination of these. This money is then invested by the fund manager according to the objective of the scheme.

Today there is growing awareness of the benefits offered by products like equities. More and more people are getting familiar with mutual funds and are willing to invest. Thus they have been recognized as one of the most important and ideal avenues for a majority of investors.

What are the different mutual fund schemes available, which scheme is right for you and what are their objectives? For that, let me ask you a question. Have you ever walked down the super store lately in your vicinity? If yes, you will find that there are more brands of each item - and more varieties of each brand - than ever before. In that case, it becomes difficult for you to make sure what you really want, but if you make a bad selection, you are only out a few rupees.

Same is the case with mutual funds. They also come with a number of different schemes with different objectives that are launched from time to time like schemes according to maturity period, to objectives, special schemes etc. Your pile of investment will only grow when you will pick the right fund.

It is always important to study about the returns given by various mutual funds offered. Remember, every problem has several researches involved in it, each backed by the study. All you need to do is select a fund that satisfies your financial needs and goals, and then let the fund/investment manger do his job. The Fund/Investment manager in co-ordination with the research team makes informed decisions about what equity or debt security to buy, hold or sell and at what point of time.

You should clearly decide the purpose of your investment decision. There are plethora of schemes available in the market that cater to meet the personal financial obligations such as children's education, marriage, retirement etc. Next important thing is the time horizon of your investment you

want to invest for and the risk appetite you have. Thereafter comes the selection of a fund type that best meet your needs i.e. income schemes, liquid schemes, tax saving schemes, equity schemes and the list goes on and on. Now the entire gamut of fund options are available to you and you can then choose the particular fund that you find is best for you.

Always give some thought process before investing. Find out what to consider and what research to do before choosing a fund. You can choose the fund on various factors but essentially these can be the following that you should look into:-

Define your objectives and time horizon.

Choose your fund by the track record of scheme's performance over time.

Always look for the right funds that will help your pile of investment to grow.

Take a look at the fund companies i.e. Origin of the Mutual Fund.

Look at the degree of transparency as reflected in frequency and quality of their communications.

Analyze your risk appetite.

Select funds that are consistent in giving returns.

Thus if chosen carefully, mutual funds can help create and grow wealth for years to come.

If investing is a new activity for you, you may be confused as where to invest, how to invest and when. In all these confusions, you may wonder why you should consider investing in mutual funds. An old saying, Don't put all your eggs in one basket” holds very much true for mutual funds as their biggest advantage is diversification which says that distributing your money across different types will reduce your risk enormously up to a certain extent.

Mutual funds offer a simple and efficient solution for investing thereby allowing investors to meet their financial goals. But investing in mutual fund is not merely giving the check and signing an application form; it also requires continuous monitoring of funds from time to time.

So whenever you plan investments in mutual funds, you will need the advice and guidance to help you reach your goals. In that case, consider seeking an advice from experts and consultants who will help you move closer to funding the dreams of your life.

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