A mutual fund is essentially a common pool of money in which investors put in their contribution. This collective amount is then invested according to the investment objective of the fund. The money could be invested in stocks, bonds, money market instruments, gold and other similar assets. These funds are operated by money managers or fund managers, who by investing in line with the specified investment objective attempt to create growth or appreciation of the amount for investors.
For example, a debt fund will have its specified objective to invest in fixed income instruments or products like bonds, government securities, debentures, etc. Similarly, an equity fund will invest in stocks and other equity instruments.
Transparency and liquidityHighly regulated sector. SEBI guidelines and regulations provide transparency and liquidity.
Small investmentsSmall investments of just Rs. 1000 every month in mutual funds can generate wealth amazing wealth.
Overseen by (SEBI)Investor protection and education of retail investors are overseen by Securities and Exchange Board of India (SEBI)
Save taxUnder sec 80CC of IT, Act ELSS (certain tax saving Mutual Funds) enable investors to save tax.
Risk mitigation toolsSeveral risk mitigation tools like STP, SIP, SWP, Balanced Funds etc are at the disposal of investors.
Negligible paperworkAvailability of relevant information and negligible paperwork makes investors at ease.