What Mutual Funds Are, How Mutual Funds Work, and
Much More
Types of
Mutual Funds: First up, you need to understand what mutual funds are,
Types of Mutual funds, you'll be able to see the difference between open-ended
funds and closed funds, load vs. no-load funds, and more.
How Mutual
funds works: Every fund will be governed by fund manager or group of fund
managers. They collect all the money you and other people invest and make a
pool of money and they will invest in MARKET (Equity/Bonds).
How do I
buy them? You can buy them online, directly from the fund house or
from brokerage Ex: ICICI DIRECT, FUNDS INDIA, and PIGGY…
What is
exit load? The percent of the amount that will be charged if you
withdraw money within 1 year of investing
What is
expense ratio? It is the charge that they collect from you to manage the
money you invested in mutual fund. It includes (Exchange cost, manager’s salary
etc...)
Are low
expense ratio funds are good for investment? You compare the mutual
funds with same returns then you low expense ratio matters. For best Fund
manager you need to pay good amount of money keep that in mind.
Taxation on
MUTUAL FUNDS: DEBT funds profits will be taxed on your TAX slab. Equity
funds which are withdrawal before 1 year will be paid 15% short term gain tax,
after 1year 10% long term gain tax. What is short and long term tax will
explain in next post.
Don’t chase
for past performance: Past performance will be a metrics to decide whether
it is betting bench mark or not. You can’t totally depend on past performance.
Are ETFs a
better choice? ETF mean EXCHANGE TRADE FUND, it is nothing but the fund
which will be having same structure for bench mark index (NIFTY, SENSEX). If
you buy these funds this mean you are buying index.
Know type of mutual funds here.
Happy investing.
Know type of mutual funds here.
Happy investing.
