How many categories of mutual funds are there in the market?
Now a day’s investment in stock and share market is as like a gambling. The rate of stock and share is fluctuating in each and every time. Before investing your money in shares who must have a long term study or find history of shares and its companies. Because it helps to understand the stability. Some times, ignorance may create big loss.
There are three broad categories of funds in the Indian market - money market, debt and equity. A money market fund invests in short-term government debt paper and is good for parking money for the short term since the principal is safe, returns better than a bank deposit and liquidity high. Debt funds invest mainly in debt instruments like government securities, corporate and institutional debt paper. They are also called income funds since people buy them for their income needs. Equity funds invest in the stock market and suit long term investors who want capital appreciation. Commodity, property and gold funds are yet to come into India.
What are Mutual Funds?
Mutual Funds are large corporations which invest the money of their clients. When you put money into a mutual fund your money get's pulled together with all the other investors who invested in the fund. Then a professional manages the money and each individual benefits from the profits or losses created by the professional money managers.You benefit from the appreciation of the stocks the fund has invested in, as well as get dividend payments from the fund as it makes a profit. Every investor receives the same percentage increase regardless of how much they put into the fund.
So if the fund goes up 30% in a year the person who put in $1,000 gets a 30% return and the person who put in $1,000,000 also gets a 30% return.
Now that you understand what a mutual fund is, let's look at a couple reasons why someone would want to invest in one of these funds.
1. Less Worries
If someone else is managing your fund for you, you do not have to consistently check your account to see what is happening. You can simply put it away and never worry about your money until you are planning on retiring.
That makes it a way to let your money grow without all the stress.
2. History looks good
In the past, people who have held onto a few mutual funds for many years have seen a positive return. That means history is with you, and there is no reason to think that the future will be any different.
What is a mutual fund?
A mutual fund is a pool of money that is invested according to a common investment objective by an asset management company (AMC). The AMC offers to invest the money of hundreds of investors according to a certain objective - to keep money liquid or give a regular income or grow the money long term. Investors buy a scheme if it fits in with their investment goals, like getting a regular income now or letting the money accumulate over the long term. Investors pay a small fraction of their total funds to the AMC each year as investment management fees.
Mutual Fund
A mutual fund is a competently managed type of group investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then naturally spread to the investors annually.
Since 1940, there have been three basic types of investment companies in the United States: open-end funds, also known in the U.S. as mutual funds; unit investment trusts (UITs); and closed-end funds. Similar funds also operate in Canada. However, in the rest of the world, mutual fund is used as a generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment companies (OEICs), unitized insurance funds, and goings-on for collective investments in transferable securities (UCITS).
Stock investing is not gambling and should not be treated as a game. Investor can lose major money in the stock market and investments simply should not incur huge losses. It is simple to purchase stocks, but difficult to regain lost money. No investor can afford to make costly mistakes in the stock market. When investors have the desire to gamble, the long term goal must be strictly reviewed and then followed.
SBI Mutual Fund
SBI Mutual Fund is India’s major bank sponsored mutual fund and has a desirable track record in judicious investments and consistent wealth creation. The fund traces its family to SBI - India’s largest banking enterprise. The institution has developed incalculably since its beginning and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint speculation between the State Bank of India and Sociéte General Asset Management, one of the world’s leading fund management companies that manages over US$ 500 Billion worldwide. In twenty years of operation, the fund has launched 38 schemes and profitably redeemed fifteen of them. In the process it has satisfied it’s investors handsomely with consistent returns.
6 Best Mutual Funds for 2009
1. American Century High-Yield Fund (AHYVX)
- With the current state of the economy, your best bet for making money is finding an investment with a stated income (i.e. dividends, bond interest payments). American Century's High Yield Fund has a dividend yield of 9.38%, which is much larger than most high yielding mutual funds or stocks.
2. The New Alternatives Fund (NALFX)
- This is the perfect mutual fund for times when people and companies are looking for environmentally-friendly ways of doing things. This mutual fund invests in companies that focus on renewable energy sources, as well as companies that are concerned with energy conservation and environmental protection. Over the next decade green and alternative energy stocks will most likely sky-rocket with gaining popularity and necessity.
3. Franklin Utilities Fund (FKUTX)
- A utilities fund is also a great way to get a flow of decent income during a time of poor stock performance. This mutual fund has a dividend yield of 4% and a 10-year annualized return of 5.17%, which is very impressive. Utility companies are a solid investment for having a stream of dividend income.
4. ING Corporate Leaders Trust Fund (LEXCX)
- Although its 10-year annualized return has been hurt by the recent stock market downturn putting it at 3.67% (which is better than all but two main value strategy mutual funds), ING's fund has performed 10% better than the S&P 500 over the past year. It also has a dividend yield of 2.46%.
5. Franklin Gold and Precious Metals (FKRCX)
- This mutual fund has been a top performer over the past decade with a 10-year annualized return of 14.42% and a current dividend yield of 8.34%. This mutual fund has performed amazingly, and it will continue to perform with gold becoming more of a flight-to-safety investment for investors.
6. Vanguard Energy Fund (VGENX)
Although the commodities boom of earlier this year has faded, oil prices will come back. It is only a matter of time. Vanguard's Energy Fund has had a 10-year annualized return of 14.81%, which is better than most mutual funds of any kind. It is positioned to perform well over the next few years.The Basics of Mutual Fund Investment
You may be wondering “what are mutual funds?” Not everyone has a huge deal of knowledge about Investing and stocks. Many of us have some money tucked away for a rainy day, and a little in our superannuation.
Now, more than ever, is the time to understand how to make your money work for you. Mutual funds pool together money from numerous investors and invest this collective sum into stock, bonds and various other investments. Your money is professionally managed with the aim of benefiting all shareholders in the mutual fund. The risk of losing money is reduced by diversifying the investments.
Also, mutual funds are cost efficient. Investing money together increases buying power and reduces operating costs per person. A major perk of investing in mutual funds is that it’s a lot more liquid than other forms of investment, so if you’re finding yourself a little short of cash you can actually sell some of your funds shares.
Investing Your Money In Mutual Funds
Investing in a mutual fund means that you have access to the services of a mutual fund manager. This means a professional is handling the daily trading of assets on your behalf. A mutual fund manager oversees the investment portfolio, and is responsible for finding the best possible returns for the invested dollar.
You can choose to invest your money in lump sums or with automatic investment. Lump sum investment in a mutual fund will typically mean you can invest as much or as little as you have, provided that it is above the minimum requirements of the fund. Automatic investment can help you save money on a regular basis, by transferring a part of your income into the fund on a regular basis.
Making Money From Mutual Funds
The value of a mutual fund is divided into shares, and the value of each share is determined at the end of every trading day. Money is earned in appreciation, dividends or capital gains distribution. It’s important that you look at the past performance when you choose a mutual fund, because not all are equal. Don’t forget to take into account fees and expenses against the average yearly return.