Mistakes done by mutual fund investor !!!This is a Complete and simple guide about how to avoid mistakes while investing in mutual funds.
To earn money is never easy .And even many financial products available in market, we always stuck with a pressing question that where to invest money?
So when you set financial goals for yourself and looks for a product which can fulfill you financial goals then mutual funds scheme are always a best choice.
Why to invest in mutual funds?
Mutual fund is the best product which can beat inflation and can match your financial goals keeping investment horizon and risk profile in consideration.
Types of mutual funds
There are different types of mutual funds but basically 3 majors are :-
An Equity fund is a mutual fund which invests minimum 65% of investment in equity and balance 0% to 35% in debt securities like government bonds, treasurer bills etc. It generally gives high returns compare to other funds as it invest majorly in equities but also higher risk product.
If you are a high risk tolerance investor than you should invest in equity mutual funds to earn extra returns over your investment and to achieve your financial goals. Its always favorable for long term horizon which is more than 5 years.
A hybrid fund is a mutual fund which invests mainly in 2 asset classes i.e equity and debt . The ratio of equity and debt enables a hybrid fund to give returns similar to those generated by equity funds but lower risk levels due to debt component.
A debt fund is a mutual fund which invests a majority of its assets in debt and money market securities. Debt funds are relatively lower levels of risk.
So when you are risk –averse, you should look for Debt mutual funds .As it is compose of Treasury bills, government bonds, corporate bonds type instrument so having very less risk and your return is the interests earn over it. Debt funds are generally favorable for short term horizon which is less than 5 years.