Mutual funds are those funds in which professionals managed pool of investments from many investors to purchase securities. Capital collected from different investors is invested in stocks, company share or bonds.
The investments are managed by fund manager, who has lot of experience of market and shares. He keep an eye on recent trends of market and invest the pool of money in different options to spread the risk.
Benefits of Mutual funds - Higher returns than bank deposit ; 2 Managed by professionals and experts; 3 Invest and withdraw any time, anywhere; 4 Registered with SEBI, so quite Safe.; Freedom to invest in small amounts.
In equity funds money collected from investors are invested in shares of different companies. When the price of share increases investor makes money and vice versa. These types of funds are for those who wants to grow money fast and ready to take higher risk.
Invest in fixed income government securities like treasury bills and bonds or reputed corporate deposits. It is less risky than equity funds. It is for those who are risk- average and looking for short investment horizon
3. Balanced funds or Hybrid funds
It invest in both equity and fixed income funds to balance the risk and certain return rate.Mutual funds gives you better return - 1000 invested monthly for 20 years in different investment options will become.3.65 laks in banks