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Mutual funds

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A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities.

As an investor, you can buy mutual fund 'units', which basically represent your share of holdings in a particular scheme. These units can be purchased or redeemed as needed at the fund's current net asset value (NAV). These NAVs keep fluctuating, according to the fund's holdings. So, each investor participates proportionally in the gain or loss of the fund.

As an investor, you can buy mutual fund 'units', which basically represent your share of holdings in a particular scheme. 

These units can be purchased or redeemed as needed at the fund's current net asset value (NAV). These NAVs keep fluctuating, according to the fund's holdings. So, each investor participates proportionally in the gain or loss of the fund.

Benefits

red-tick Liquidity--The most important benefit of investing in a Mutual Fund is that the investor can redeem the units at any point in time

red-tick Diversification--The value of an investment may not rise or fall in tandem.Diversification reduces the risk involved in building a portfolio thereby further reducing the risk for an investor

red-tick Expert Management--A novice investor may not have much knowledge or information on how and where to invest. The experts manage and operate MF. The highly qualified expert keeps a watch on timely exit and entry and takes care of all the challenges.

red-tick 4) Flexibility to invest in Smaller Amounts--Among other benefits of Mutual Funds the most important benefit is its flexible nature. Investors need not put in a huge amount of money to invest in a Mutual Fund. Investment can be as per the cash flow position.

red-tick Accessibility--Mutual Funds are easily accessible and you can start investing and buy mutual funds from anywhere in the world.

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Safety and Transparency

With the introduction of SEBI guidelines, all products of a Mutual Fund have been labeled. This means that all Mutual Fund schemes will have a color-coding. This helps an investor to ascertain the risk level of his investment, thus making the entire process of investment transparent and safe.

This color-coding uses  3 colors indicating different levels of risk-

red-tick Blue indicates low risk

red-tick Yellow indicates medium risk,

red-tick Brown indicates a high risk