What does Mutual Fund mean?

Posted By : Aubrey Mead , on Oct, 2017

 

There are a number of investment programmes available across the market. Even the banks provide the facility of increasing the money you keep in the account. Among many such options of the investment schemes in the present day market, one lucrative scheme is the Mutual Fund.

In order to understand how profitable this Mutual Fund can be for you, it is essential to have a thorough understanding of the meaning of Mutual Funds.

Mutual Fund is a well planned investment scheme managed by the professional investors. It is usually operated by companies who manage assets. The companies do so by bringing together different people who are interested to invest their money in the bonds, stocks and other tradable financial assets or securities.

The investors buy the units of Mutual Fund. These units actually represent the share holdings of the particular investor in the particular scheme. Similarly, these units can also be redeemed according to your requirement. In case you want to redeem the units at any point of time, the NAV or the net asset value is to be taken into account. As the net asset value fluctuates and varies from time to time, higher returns are achieved if you redeem the units at the time when the NAV rises.

Mutual Funds are at the advantage of both parties, that is, the investors and the companies who sell their shares. So basically, it is a win-win situation for either of the parties involved. As there are a number of investors, the net sum of money invested, is added up to a lump sum and at the same time there is no pressure on the individual investors as they are able to invest their amount of share at a low cost. This is the biggest advantage of the Mutual Funds.

The good news about Mutual Fund investment is that all of them are registered with SEBI. This ensures that the interests of the investors are protected.

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