Investment in Stock markets offers higher returns on your investments. But Investment in stock markets requires a certain amount of knowledge about the Equities or Shares, Debentures, Bonds, etc. Normally, people do not possess the same. Yet people venture into investing in the stock market and burn their fingers by losing their hard-earned money. To overcome this problem and utilize the advantage of higher returns on investments, Mutual Funds have been established.
How Mutual fund Works:
As layman understanding, Mutual funds pool the money received from the individual investors called Corpus and invest in the Stock market in Equities, Debentures, bonds, etc. Mutual Funds have in- house research team and investment professionals who regularly advise and monitor the performance of the investment so made.
Investment in Mutual Funds can be done either in a lump sum or by way of monthly contribution, which is called Systematic Investment Plan, popularly known as SIP. A SIP can be started with as low as Rs. 500 per month.