For the investors, the biggest concern is the safety of their invested amount and considerable return. In many options, one can get a good return, but the risk is too high to undertake. In some cases, the risk is completely zero or too low, but the return is below the inflation rate also. Hence what one wants is an option where both of these parameters can be balanced. The mutual fund is the best option for such people who want to have a moderate return at moderate risk. There are also many other benefits that attract the investors to have a good portfolio consisting of units of various companies.
The mutual fund:
Common people may not be aware of how a mutual fund works, and he can get a good return. In the market, one can find several asset management companies that handle various mutual funds. For every mutual fund, there is a fund manager who manages the fund and invests in the open market after checking the risk and trend of the market. One can go for direct mutual fund investment as there are several options available in the market nowadays. The process of investing in a mutual fund is also very simple. One needs to offer his documents for KYC, and after completion of the same, he can invest in any option of any mutual fund company.
The investment:
One can go for the investment in this segment with as low as 500 per month. One can also go for a systematic investment plan as well as ELSS, which is one of the leading types of the mutual fund. The investor can offer a cheque or go for the direct debit from his account while going for the investment. There are two options available here which are known as open-ended and close-ended.
The options:
In the open-ended investment, one can withdraw the amount at any stage while in close-ended one cannot do so. There is a certain period in a close-ended scheme for which he has to keep the amount invested. There are also certain charges, such as withdrawal and fund management charges that one has to bear. It can be lowered if one goes for the direct mutual fund without the help of any broker.
This option of investment is for medium to the long run, and hence, one needs to wait for a little time to get a good return on the amount invested. The invested amount is usually safe, and in case of any loss, one can balance the same with the additional purchase of the units. This is the fundamental of the SIP also where one can benefit in case of movement of the market in any direction. The investor can have NAV available from the site of the concerned AMC or the internet. One can also call the company for the NAV of the concerned day. The NAV is the unit price at which one can buy or sell additional units. The units available are shown in the statement of the company which it offers at a regular interval to each of its investors.
