Basics of Mutual Funds - Beginners - Part 1

The following information will help to the investors who have not yet started investing in mutual funds, but willing to explore the opportunity and also for those who want to clear their basics for what is mutual fund and how best it can serve as an investment tool.

Investments needs vary from person to person. While someone might want to plan for his children’s education, life after retirement, buying a property etc., someone might be saving for a vacation abroad or buying a luxury car etc. With objectives defying any range, it is obvious that the products required for investments to meet these objectives will vary as well. Investors saving for the proverbial rainy day may warrant for more secured avenues of investment while others may give more weightage to just returns.

Mutual Funds though still at a nascent stage in India offer a plethora of schemes and serve broadly all type of investors. The range of products cover all kinds of risk classes – the high risk – high return class, the medium risk – medium return class and the low risk – low return class. There are also funds meant exclusively for investor and old, small and large investors. Moreover, the setup of a legal structure, which has enough teeth to safeguard investors’ interest, ensures that the investors are not cheated out of their hard-earned money. All in all, benefits provided by them cut across the boundaries of investor category and thus create for them, a universal appeal. The following shows the risk ladder for the MFs category wise.