Monday, August 27, 2012

Importance of mutual funds in India

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India has emerged as one of the biggest economic power in the last one decade. The growth rate has witnessed a tremendous increase in terms of percentage and productivity. Apart from this savings and investment has been a constant culture in India which has evolved through all these years taking different forms and manifestations. There is so much f importance laid upon mutual fund India as our elders believe in saving for the future not only for a secured tomorrow but also to ensure the well being of their families. Mutual funds have become the new age mantra for increasing the income apart from the savings bank account, fixed deposit and gold. Earlier mutual fund was meant only for a limited section of industries like banking, jewellery and reality, but looking at the huge potential that the sector offers not only to its customers but also to the investors, the bar has risen to include infrastructure, FMCG and telecom industries.

Mutual funds India are categorized mainly in four categories- money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. There are different rules that guide the investment policy for each of these types of funds but the ground rule that applies to all these funds is that one needs to look at three things at the time of investment. These three things are risk factor- usually it is said that higher the amount invested, higher is the risk and greater are the returns, time duration- total time period for which the money is invested in mutual funds and the portfolio which is investing in many types of funds in order to maximize the returns that come from each funds. Therefore mutual fund investors can invest in a variety of instruments like stocks, bonds, money market securities, gold or a combination of these which provide diversification to the individual who is investing.

Investments are considered to be one of the best tools to maximize the financial goals of an individual. Every investment policy is unique in its own way as it offers over 1000 schemes to boost the financial goals and suits the investment objective of the individual. Another factor that makes mutual funds a lucrative market is the fact that money is managed professionally once invested, it helps in diversifying the portfolio of the investor, low cost of investment due to economies of scale, and the market is well regulated and highly liquid in nature. Apart from this at the time of investment the person should be careful about the nature of the market and the profit margin before making a purchase or sale of funds respectively as the market knowledge factor determines how successful the returns are going to be for the individual.