Money makes the world go round, and don’t we all know it! All of us are looking for ways to get ahead financially. Mutual funds are one way to increase your net worth by becoming involved in collective investing. Investing in mutual funds reduces the risks of individual trading by making you part of a collective of investors. These mutual funds can provide you with a prospectus of fees and their past performance to help you make the right decision about where to put your money. Independent rating services will also guide you in finding a mutual fund that has the same goals as you.

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.

How You Can Benefit From Mutual Funds?

All investment comes with risk. It is possible to lose money invested in mutual funds. Long term, this risk can be managed with some strategic investing, but can be a little disconcerting in the short time. Investments have the potential to both increase and decrease in value, in line with economic change, but in the long term investments do tend to increase with time. These same risks are found in the housing market and traditional stock trading. Mutual funds reduce the risks slightly with the ability to weather some financial instability due to diverse investing.

If anyone you know is still asking “what are mutual funds?” it’s time to let them in on our little secret. Mutual funds are a relatively low risk way to make the most of the money you have. By investing with others you’re able to make the most of the money you have and increase your assets. Your mutual fund manager handles the investment decisions for you whilst your net worth continues to increase over time.



By: Bob Winter

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You must have read this statement many a times in the TV commercials and also on the form that you must have filled and wondered what does this line mean. Let me tell you this line means. I do agree that the mutual funds are subject to market risk but that market risk if you go to consider is very minimal. Thanks to the stringent regulations employed by SEBI (Stock Exchange Board of India)..

Please note that mutual funds do not provide any guarantee of returns or capital (initial amount you invested).

Mutual funds are a good place to start because they offer you the opportunity to diversify quickly into a range of investments

Hence, nobody can assure you of returns, or even not suffering losses. Going strictly by the book, the possibility of a fund performing exceptionally poorly and all your savings dwindling to nothing is quite real.

Having said that, please remember that over the long term, the possibility of such an extreme event is quite negligible. If the historical performance is to go by, then there are hardly any diversified equity funds which have delivered negative returns over the last 10 years, if one would have invested through the SIP.

Therefore, there is no need to be overly concerned. Mutual funds are a very convenient vehicle for individual investors.

Moreover, returns tend to be commensurate with the kind of risk you take. Mutual fund schemes are riskier than the assured return schemes like fixed deposits and bonds. But, they also have the potential to generate far superior returns.

It is upon the investor to strike a balance between the return he wants to earn and the risk he wants to take. Having done that, he can invest in an appropriate combination of assured return schemes (National Savings Certificate, Public Provident Fund, post office schemes, bonds from institutions) and mutual funds.

Mutual Funds come under the regulation of the Securities and Exchange Board of India and have to meet stringent regulations. Therefore, they cannot just close shop and run away with investors’ money.

Mutual Funds comes under SEBI scanner and so does all the other public offering and there is a security deposit that they have to pay for getting listed. The chance of being fraudulent is negligible. With the growing number of people investing in mutual funds they are making it more reliable.

In fact, India happens to have quite stringent rules and norms regarding the setting up of an AMC and making periodic portfolio disclosures (stating where their have invested their money).

Moreover, in the set-up of a mutual fund, there is a body of trustees who are supposed to look after the interest of investors whose money is being managed under different schemes.

The mutual fund itself is a trust registered under the Indian Trust Act, and is initiated by a sponsor. The sponsor is the person who acts alone or with another corporate to establish a mutual fund. The sponsor then appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund.

Therefore, while it may be possible for a mutual fund to inflict losses to the investors as a result of poor fund management, they just can’t wind up their operations and run away with your money.

Mutual funds you can invest in

Share Market

Kotak Mutual Fund

Franklin Templeton India Mutual Fund

Birla Sunlife Mutual Fund

Prudential ICICI Mutual Fund

HDFC Mutual Fund

TATA Mutual Fund

Sundaram Mutual Fund

Cholamandalam Mutual Fund

Standard Chartered Mutual Fund

DSP Mutual Fund

Principal Mutual Fund

SBI Mutual Fund

Reliance Mutual Fund

Deutsche Mutual Fund

ABN AMRO Mutual Fund

J M Financial Mutual Fund

ING Vysya

Optimix

HSBC Mutual fund

Fidelity AMC

For more information on Mutual Funds and Investments visit Kotak Mutual Fund



By: Mossan Smith

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