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What is Mutual Fund

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What is Mutual Fund

Hello Everyone, So today we will understand about the mutual fund. We will talk about, what is the mutual fund, how it works and what are its benefits. We will also talk about how to invest in mutual funds and what is its advantages, and it is considered to be more secure rather than directly investing in the stock market.

Most people are afraid to hear about the mutual funds or other financial words. If, you look it closely then fearing to understand the fundamental of the mutual funds is not necessary. However, before to understand it first the central question arises, what is a mutual fund?


The amount invested by a massive number of investors is called a mutual fund, which put into a fund. The fund manager uses his investment management skills to spend this money in various financial instruments. Mutual funds invest in many ways, which determines their risk and returns. When many investors invest in a fund together, the fund divided into equal-equal parts called unit.

For example, suppose some friends want to buy a piece of land together. The price of a portion of the property of hundred square yards is one lakh rupees. Now if you divide this fund into units of ten rupees, then 10,000 units will be formed. Investors can buy as many groups as they wish, according to their investment strategy. If you have only one thousand rupees for investment, then you can buy a hundred units. In the same proportion, you too became the owner of that investment (land).

Now suppose that the value of this one lakh investment has increased to one hundred and twenty thousand after one month. Now, according to this investment, the unit price will be deducted, then the unit of ten rupees has now become twelve rupees. The investor who bought a hundred units in one thousand rupees, according to the twelve rupees per unit, now his investment (100×12) had been Rs. 1200.

Based on the amount spent by you as an investor, how many pieces you own. Accordingly, an investor can also be known as a unitholder. Also, to the other income earned from this. It increases in the value of the investment reduced to the proportion of the expenditure, the burden and taxes, after dividing the units with the number of units shared by the investors/unit holders. From this, you can see that an investor who can’t make significant investments, has the facility of investing in small units.

Apart from this, the most significant benefit of Mutual Fund (MF) is that an investor who does not have much information about the market leaves his investment in the hands of experts. These experts determine where, how and when to invest.

Mutual funds spend in many ways. The most prominent bonds and stock markets are. Apart from this, you can invest in Gold or any other commodities. There are several types of funds which are known as their investment. The main ones are Equity, Debt and Balanced Funds. The highest variety found in equity funds. After running ahead in the Mutual Fund in Hindi, we will learn about all these in different detail. Also, determine what the NAV is and how it counted.

In recent times, mutual funds have emerged as an investment option, and more and more people are investing in it. The main reason for this is that investing in mutual funds is comfortable and investing in mutual funds through SIP is becoming more and more people’s choice. Mutual funds are an excellent option for investing where interest in working banks is happening. If spent for a long time, then it can be the solution to get the highest return on investment.

What are the advantages of investing in a mutual fund

First of all, I would like to tell you that everything has its two sides means one is good and the other one is the wrong side. Similarly, mutual funds also have some advantages and disadvantages also but before invest anything read all the terms and conditions otherwise some time we make mistakes before choosing any mutual fund.

So let’s talk about some benefit or advantages of mutual funds.

1. Your Money invests an Expert Fund Manager

Apart from this, there is no guarantee that you will get good returns. However, the experience of the fund manager, knowledge and skill should be of benefit. If you are an ordinary investor and you do not have the necessary information and time to invest in the stock market, then the mutual fund for you is an excellent way to spend money in the stock market.

2. Diversification

As mentioned above, your money invested in many places. So if one or two shares are wrong, then you might not be so dammed. It is also called diversification.

3. There are many types of mutual funds.

I want to tell you that mutual funds are lots of types or there are lots of variety of mutual funds. You can select the fund according to your needs. Many people think that mutual funds only invest in the stock market. It is not so. There are also mutual funds which are not less than the stock market fluctuations. I will discuss various types of mutual funds below.

Types of Mutual Fund

  • Mainly mutual funds can be 3-4 types
  • Equity Mutual Fund
  • Debt Mutual Fund
  • Hybrid Mutual Fund
  • Gold Mutual Fund

1. Types of Equity Mutual Funds

There are also several types of Equity Mutual Funds. It depends on what kind of stock investing in the funds.

Large Cap Fund: Invest in a large company’s stock. Example: SBI Blue Chip Fund, ICICI Prudential Focused Bluechip Fund, Birla Sun Life Frontline Equity Fund and so forth.

Multi-Cap Fund: Invest in every kind of company’s share. Example: ICICI Prudential Value Discovery Fund, Franklin India Prima Plus Fund and so forth.

Midcap Fund: Invest in a mid-size company. Example: Mirae Asset Emerging Bluechip Fund, Franklin India Prima Fund and so forth.

Small Cap Fund: Invest in a tiny company’s stock. Example: SBI Small & Midcap Fund, DSP BlackRock Smallcap Fund and so forth.
Equity-linked Savings Scheme (ELSS): Tax benefit is available on investing in such funds. Example: Axis Long Term Equity Fund, Birla Sun Life Tax Relief 96 Fund and so forth.

Note everyone I have given the name of the funds to provide you with examples only. It is not suggested to invest.

Note that equity mutual funds may also be of several types. Like some mutual funds invest in only one Area Company. Such as banking fund, farm fund, technology fund and so forth. Such funds are called Sector Funds.

I have just illustrated the idea of giving you the impression. Moreover, yes, when I am talking about a big or small company, I mean the market capitalization of the company. On investing in ELSS, you get Tax Benefit under section 80C.

Also read,

How to make money from YouTube- https://indiatechmoney.com/how-to-make-money-from-youtube/

How to become a successful Blogger- https://indiatechmoney.com/how-to-become-a-successful-blogger/

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2. Types of Debt Mutual Funds

Many people think of mutual funds when they believe that mutual funds only invest in the stock market. It is not so. There are also mutual funds which are far away from the stock exchange. Something like this happens in Debt Fund.
Debt Mutual Funds invest in government or company’s debt (bonds). It is evident that when investing in such funds, you do not have to face the ups and downs of the stock market.

  • Liquid fund (e.g. ICICI Liquid Fund, HDFC Liquid Fund)
  • Ultra Short Term Debt Fund (e.g., ICICI Flexible Income Plan, Axis Treasury Advantage Fund)
  • Short-term debt fund (e.g., SBI Short Term Debt Fund, Reliance Short Term Debt Fund)
  • Long-Term Debt Fund (example: ICICI Income Plan, Reliance Income Plan)
  • Gilt fund (e.g. SBI Gilt fund-long term plan, ICICI Prudential Long Term Gilt Fund)

There are also many types of debt mutual funds.

3. Types of Hybrid Mutual Funds

There are also some mutual funds, which invest a portion of the share market and partly into bonds. Such funds are called a hybrid fund.

Balanced Funds: Such funds invest at least 75% of the money in the stock market. Example: HDFC Balanced Fund, ICICI Prudential Balanced Fund, Franklin India Balanced Fund

Dynamic Asset Allocation Fund: Under the circumstances, where you want to invest. Example: ICICI Prudential Balanced Advantage Fund

Also, there are such funds which invest most of the money into debt and invest a little money in the stock market, such as monthly income plans (MIP).

4. Gold ETF Mutual Fund

Gold ETF is a Mutual Fund, which investing investor’s fund into the Gold. The determination of Gold ETF Fund is by gold price. Investors can buy gold online at home. Investors can invest gold in 1 grams to 10 grams.


I hope guys today you know basics about the Mutual funds. If you learn anything new then plz support us by share this post with your friends and relatives. If you have any suggestion for us then comment below.

Also read,

How to make money from YouTube- https://indiatechmoney.com/how-to-make-money-from-youtube/

How to become a successful Blogger- https://indiatechmoney.com/how-to-become-a-successful-blogger/

7 Best WordPress Backup Plugin- https://indiatechmoney.com/7-best-wordpress-backup-plugins/

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About author

Hello Guys, My name is Sandeep Gautam. I am the founder of Indiatechmoney. I have done my masters from IIT Roorkee. My interest is in Business, technology, and blogging. I want to give the best information about the business, technology and blogging through this blog.
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