Can any one tell me about the mutual funds,how does it works and i could earn some money through mutual funds?

Answer 1

Mutual funds are managed by investing in shares or/and in securities for earning profit. They declare Net Asset Value on which you can get your returns. some fund managers play well and get you gains and some drown you badly. it is your money and they play !! so you must be ready for risk to earn more than bank deposits.You must see their track record, their investment strategy and the soundness of the companies in which they invest. good luck[caution never invest 100% of your savings..play safe with smaller amounts in various groups]

Answer 2

Mutual funds are collective money from the public & invested in stock market by proffessionals which in turn the net asset of the fund is know as NAV ,( Net asset value.) The share price increases then Nav increases some thing brought @ 15 rs NAV sometime later it becomes 30 then Ur net profit is 100% u can sell all ur unit holdings @ 30 this NAV changes day to days basis.
U can earn with no limits but only thing u should have a long term holding period say abt 3 to 5 yrs then assured U will make big .

Answer 3

Mutual Fund is a investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end mutual funds continuously offer new shares to investors.

Answer 4

Mutual funds are pools of peoples' money put together to invest in many, many stocks. So in essence, you're very very diversified for a small amount of money!


Mutual funds are appropriate for some and the wrong investment for a growing number of people.

For me, I would NOT invest in mutual funds if it weren't for having a 401K.

Overall, Mutual funds are not good (once you're educated in investing) and many people should not invest in mutual funds unless you have to (like if it were a requirement in a 401K).

Here's why.

First of all, mutual funds exist to take average person's money.

Second, mutual funds seem to be "happy" just to do better than the S&P index, since that's often the gauge. A monkey, yes monkey, can usually outpick most mutual funds. Over 60% of the mutual funds out there can't even outperform the market. (CNBC reported this week the latest # was 72%) That's VERY SAD!

Third, mutual funds have embedded management fees in their costs. Most of these mgmt fees are 0.5% to 2% annually.

Fourth, most mutual funds exist not to earn you a lot of money, but are more interested in NOT "losing" you lots of money. That way you stay with them and they continue to collect their fees.

Fifth, mutual funds are not as liquid as one might think. If you're in mutual funds and a Bush talks in the morning and you call your broker to sell because the market is now tanking, the broker will gladly take your order, but the order will not be executed until the day is over and the negative impact is already priced into the fund.

Sixth, many mutual funds charge extra "fees" if you buy/sell their fund within a certain amount of time, meaning you must keep your money in the fund 90 days to 2 yrs before you're free from the fees (read the fine print on trying to get a withdrawal). These fees can be up to 3% or so of your money as well.

Seventh, mutual funds have to be in the market. So if the market is crashing or going down like it has between May and now, then the funds still have to be in the market and taking those losses too. With some practice, you can time your monies to avoid some of those losses (it'll take practice).

Convinced yet? Need more?

Eighth, mutual funds have to be pretty diversified and so if there are hot and cold sectors, they are probably in both the hot sectors and cold sectors. However, as an investor, you can buy into just the sectors you want, like metals, or housing, or energy, etc. or right now, Brokers/Dealers, Retail, and insurance!

Ninth, mutual funds are so big, they can only invest in certain companies. A small mutual fund with $10 billion in assets. 1% of that money is $100 million. How many companies are this big where $100 million investment isn't the whole company? Do you want to limit yourself to just those larger companies like Times Warner, Microsoft, home depot, cisco, ebay which have been sideways for years? I think not.

A better way would be to buy ETFs (exchange traded funds) or holders. These trade like stocks, so are very liquid, and do not have the high fees like the mutual funds. Further, you can buy/sell them as you wish. They represent sectors or indexes, so buying them gives you the same diversification as the sector/industry/index, but with much less overhead!

See Amex.com (american stock exchange) or ishares.com, holders.com for more info.


You need to invest for yourself. If you can't, then sure, use mutual funds (see link below for more info). But be aware of the shortcomings (and as you can see, there are many).

Let me know if you have further questions.

Best of luck!


Info on mutual funds
http://beginnersinvest.about.com/cs/mutualfunds1/a/aa031501.htm

Answer 5

Mutual funds are a good way of investing in market for a novice investors like us. Fund houses basically invest our money in variety of scrips & u get profit when the N.A.V. of your subscribed fund increases & N.A.V. is basically net asset value of ur subscribed fund which is calculated by the fund house. some of the popular fund houses in india are HDFC, ICICI, Citibank, Reliance & they have their own mutual funds & OR market other mutual funds also like franklin, fidelity etc. hope this is enuff for now

Answer 6

In India a mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. Investors can conveniently buy and sell units any time at Net Asset Value (NAV) related prices which are declared on a daily basis.
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. They can buy or sell the units of the scheme on the stock exchanges where the units are listed. Some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. At least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
The aim of growth oriented mutual funds is to provide capital appreciation over the medium to long- term period. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks.
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes.
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth.
There are M.F schemes which offer tax benefits to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits.
The growth oriented M.F schemes invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.
The sector secific mutual funds/schemes invest in the securities of only those sectors or industries as specified in the offer documents e.g. Pharmaceuticals, Software, Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/ industries. While these funds may give higher returns, they are more risky compared to diversified funds. The Gilt funds invest exclusively in government securities. Government securities have no default. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.