What are the different types of mutual fund investments?

People who invest in stock markets should have complete knowledge about where and when the variations might occur. In order to save yourself from the uncertainties of stock markets, it is better to invest a fixed amount of your income in a mutual fund scheme.

There are different kinds of mutual funds in the market and this can even cause some confusion as in which type of mutual fund you must go for. In case of mutual funds which is also known as short term investment plan, the time interval can be chosen accordingly. Those time intervals can be monthly, weekly or quarterly.

There are two types of assets in which the mutual funds are invested and they are equity and debt. There are various mutual fund apps which have been introduced lately in order to make it simple for the investors to gain much knowledge about how to invest and where to invest. These apps will give you information about all the investments across various mutual funds.

It will let you schedule your transactions and also change the default bank mandate. You can also submit additional purchases and switch instructions accordingly. You can even view your account statements and also change the other personal details like email id and password too.

Equity funds invest in the companies which buy shares of the companies and produce returns by selling those shares or by sharing the profits among the companies in the form of dividends.

While debt funds provide money to the companies and they don’t invest in it. The borrowers issue certain bonds which signify that they have bought funds and the companies need t pay interest for a certain period.

Low-Risk Mutual fund

Low-Risk funds is the first type of mutual fund investment. These mutual funds are extremely safe and are low risk. It falls under the debt category and the amount of credit risk and interest rate risk are comparatively low for the investors in this category. These investments are generally done by the top-rated companies for a short period of time and the risks are less.

Tax saving mutual fund

Tax saving mutual funds is the second category which helps in growing your money. It is also known as ELSS which stands for Equity Linked Savings Scheme mutual funds. There is a lock-in period of 3 years for this type of mutual fund and you can’t withdraw your amount for this period of time. The returns from this investment are highly tax saving and you have the potential to grow your money by saving lot of tax.

High risk mutual fund

High Risk Fund is the kind of mutual fund investment where you need to invest for at least 5 years and the equity market can go through various ups and downs during this period of time. During this time, you can show your growth potential and various companies tend to invest in this type of mutual fund.

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