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INVESTING IN MUTUAL FUNDS

Let’s look at this issue from a beginners view

In a mutual fund, money is collected from the investors and the money collected is put into investments and these investments depend on the wants and needs of the investor. After all the aim is to increase the monetary value .Thus, if SBI Mutual Fund was initially to come-up with an equity scheme that was open ended, then the investor’s money that has been collected for this scheme would be invested initially  into equity shares. Hence, the units that were once issued at Rs. 10 would start to increase with the rallying of share prices. As a result of this rallying, the total asset value of the purchased units, which began at close to Rs. 10, starts

increasing. So it increases and goes up from Rs. 10 to say Rs. 11. Then the individual who invested in these units at the price of Rs. 10 can sell it back to the mutual fund at Rs. 11. Owing to the fact that this is a scheme that is open ended, the mutual fund can continue to sell units at the currently existing total asset value. Thus, a new investor who initially did not buy the shares at Rs.10 can now choose to buy the shares at Rs.11. This is how investing in mutual funds in India and other parts of the world work.

If you are a beginner and wish to invest in mutual funds you should have some basic awareness & should be aware of the various big mutual fund companies that exist in India.

A large majority of the equity mutual funds are known to give good profits when the markets are climbing. There are a large number of mutual fund investment opportunities in India and people have the potential to make good money.

The type of mutual funds in India that you choose to invest in depends upon your age, family profile aim and your capacity for risk taking.


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Author: Myrtice Lovett

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