Mutual fund for beginners – Mutual fund is a type of fund collected from Retail Investors (Individual), Institutional Investors (Insurance companies, Banks, Corporations etc.) to invest in Stocks, Bonds, Gold and other asset. This fund collected by the Asset Management Company (AMC) and we also called them Mutual Fund companies.

What is Mutual Fund meaning, explain !

Mutual fund is an investment scheme provided by mutual fund companies where people invest their money without the complexity of market analysis. These fund by multiple investors managed by professional Fund Manager of mutual fund house’s. Purchasing mutual fund units, which are called Net Asset Value (NAV). In mutual funds, people just need to start investing, and the rest of analysis and work is done by the professional fund manager. The fund manager have their experience research team so they can take better investment decision. The mutual fund companies charge a fixed percentage of commission on your invested amount, it’s called Expense Ration. The expense ratio of mutual fund companies can be different by their type. Investing in mutual fund for beginners.

Types of mutual fund

There are many types of mutual fund for beginner by their risk and return-

1. Equity Mutual Fund – This fund primarily invests in stocks listed on NSE and BSE. This fund come with risk and have high potential of growth in long term. This fund is suitable for investors who have a long-term horizon. Here are some most popular type of Equity Mutual Fund-

Types Equity Fund	Description	Risk Level	Typical Expense Ratio
Large Cap Fund	Market Cap > 20000 cr	Low – Medium	0.5 – 1.5 %
Mid-Cap Fund	Market Cap 5000 – 20000 cr	Medium	1 – 2 %
Small Cap Fund	Market Cap < 5000 cr	High	1.5 – 3 %
Flexi Cap Fund	Large , Mid , Small	Medium – High	1 – 2.5 %
Index Fund	Track Index (NIFTY, SENSEX)	Low	0.1 – 1 %

The equity mutual fund managers are invests money in stock market, if you don’t know the basics of stock market, you can read my post about “Stock-Market for Beginners” to get information about it.

2. Debt Mutual Fund – Debt Mutual fund invests in fixed income security like Bond, Treasury bills and other safest asset instruments. This fund knows as low risk and low return mutual fund. Debt fund is for investors who are suitable for minimizing risk and wants their investment safety and liquidity.

3. Hybrid Funds – This fund is a mix of Equity mutual fund and Debt mutual fund. It has medium risk and reward. It is suitable for investors who want moderate reward with some moderate risk.

4. Liquid Funds – This mutual fund invests in short term debt instrument. Liquid fund are provides you high liquidity with very low risk. It is perfect for your short term investment.

Pros and Cons of Mutual Fund

Here are some Pros and Cons of Mutual Fund –

Pros of Mutual Fund	Cons of Mutual Fund
1. Your Investment managed by professional fund manager by their years of experience.	1. Mutual fund companies charges expense ration by their investors.
2. Diversity your investment in multiple assets like (Stock, bond etc.).	2. Mutual funds returns are not guaranteed, it comes with market fluctuations
3. Provide investors good liquidity so they can buy or sell their units any flexible time.	3. Investors does not have control of their fund, all decision are made by fund manager with their own preference.
4. Providing Systematic Investment Plan (SIP), so small investors can also invest systematically with small amount.	4. Too much diversification can reduce your long term return.
5. Investors can track their performance through NAV (Net Asset Value).	5. Some mutual funds companies have lock-in time like (ELSS- 3 Years).
6. Equity Linked Savings Schemes (ELSS Fund) provide tax deductions under Section 80C.	6. If you redeem your mutual fund units before lock-in period, they charge Exit Load charges in your investment.

Why invest in Mutual Funds ?

The mutual fund is a simple and smart way to grow your wealth over time without having expert knowledge. It is a way to work your money for you by pooling it with others and letting professional fund managers to invest it in high potential return assets. The Mutual Funds are regulated by Securities and Board of India (SEBI), if any unfair activity happens to you, you go to the SEBI official website and report that activity. If you wa

“If you invest your money, your money work for making more money.“

Conclusion

The mutual funds are the best for beginners to start their investing journey. I think my post about Mutual Fund for beginners is to help you about knowing what is mutual fund, how it works and their types. If you think I have miss something important so you can comment below for other readers help, and you can also contact us.