Nowadays, the financial market offers plenty of investment plans which give high returns on your investment. All these investment plans have ample benefits along with some certain limitations; thus, the client has to invest his money in these plans wisely. Usually, it is the lower and middle-class people who desire to save some amount every year and get high returns on it. A mutual fund is a best-suited option for them because they receive the amount they wished for after a certain period of time. Hence, long term, as well as short term financial goals, can be easily achieved by investing in mutual funds.
The terminology:
The investor should be aware of the terms used in the mutual fund market to understand the investment plans. Few of them are listed below:
- The fund manager- The person who does the duty of managing the funds related to the concerned scheme is known as the fund manager. Apart, from managing the funds, he also performs the duty of monitoring the same. The fund manager also has the right to shift the funds from one sector to another or from one company to another if any risks are involved. For the services, every investor has a fund management charge levied upon him.
- NAV formula – The acronym NAV stands for net asset value. Only depending upon the NAV( net asset value) we can get to know how many units can we get for the amount we have invested or how much amount can we get if redeem all the units. NAV formula is pretty easy to understand where the net asset is divided by the total number of units by the fund manager.
- Unit– It is a part of the total stake which is given to the investor in exchange for the amount he has invested in the funds. Every unit has its own value. For example- The investor will get 4 units if each of them costs 150 and hence he has to invest 600.
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The below are benefits of investing in mutual funds only.
- A broad spectrum of choices –The investor can take help from the wide variety of options offered by the market to invest his amount in certain safe sectors. The investor can enjoy with the returns coming from the small caps, mid caps and large caps where the amount is invested by the fund manager. Hence, the wide options make it quite simple for the investor to get high returns at low risks.
- Transparency – It is a bit difficult for a common man to understand the complicated investment plans of stocks, gold, and land; hence, a mutual fund is an ideal choice for them. Mutual funds provide a clear cut idea regarding the investments and the returns one would get if he redeems all the units.
- Investment is simple– Investing in mutual funds is a pretty easy task. You can buy the units just by filling a form. Also, you can choose among the online or offline options for investing in different segments.
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