Mutual Fund - What is that ?

• Mutual Fund - 

                    In simple words, it is a "wise man's portfolio." A person diversified his investments into stock market (with various sectors), debts, bonds, and cash. The mutual fund does the same through which the investor gets diversified portfolio y investing in them. Investor doesn't need to diversify their portfolio if they are investing in mutual funds, they diversify the investments they got. Also, there is a person "Fund Manager", who manages the funds, where to invest ? , when to invest ? He takes care of risk and everything.

                   The names of the mutual fund it's self suggest where they invest their corpus (money invested by the invested in the a fund) as equity Large cap fund, small cap fund, multi cap fund, arbitrage and debts funds. 

                   If the fund name is equity then it invest in equity i.e. stock market by 60% to 75% of the corpus which are able to give more returns over period of time. There are some sub categories - Growth, Dividend. 

                  Growth says that the fund totally works on the stock market, there is no promise that the investor will get any dividend. Growth funds gives awesome returns with some risk.

                  Dividend says that it gives dividend same as the stock market. There are some options here - 

• Daily Dividend - Theses funds gives dividend daily where the amount is very tiny.
• Weekly Dividend - Dividend receives by the investor are by the week.
• Monthly Dividend - It acts as pension to investor. A monthly dividend option is good.
• Also there available of more options like quarterly and yearly.

                 Some investors don't need dividend, for them there is option too as dividend re-invest. If you choose this option them your invested amount returns will be equal to the growth fund returns.

* whatever the dividend option you choose daily, weekly, monthly or any, if the fund has the money then only they will distribute it to the investor. The dividend money came from the intra-day trading done by the traders from that fund not from the corpus.

               The mutual fund manage by the firms those are called as Asset Management Company (AMC). The top AMCs in India by the corpus are ICICI Prudential, HDFC Mutual Fund, Birla Sunlife Mutual Fund and SBI Capital.

                The good returns and wealth are generated by the growth funds, although their NAV (sum of total of market value of the shares hold in that portfolio including cash, liabilities, dividend received, etc.) are relatively high as compared to the dividend option funds.

              In next we will see some calculation, through which one can generate weath with minimum amount of investment.