Question 1

Why invest in Mutual Funds?

Accepted Answer

Investing in mutual funds helps in building wealth, achieving a distant goal, retirement planning, or saving tax. Mutual funds are a flexible asset class that has multiple benefits.

Question 2

What are the types of Mutual Funds available in India?

Accepted Answer

The mutual funds available in India are broadly categorized based on structure, asset class, and investment goals.

Structure-based Categories

-Open-ended funds.

-Close-ended funds.

-Interval funds.

Asset Class-based Categories

-Equity funds.

-Debt funds.

-Hybrid funds.

-Solution-oriented funds.

Categorization based on investment goals

-Growth funds.

-Tax-saving funds (ELSS).

-Liquidity-based funds.

-Capital protection funds.

-Fixed-maturity funds.

-Pension funds.

Question 3

What are the pros and cons of Mutual Funds?

Accepted Answer

Mutual funds are a complicated asset class and have several pros and cons. Listed below are some of them-

Pros

- Professionally managed by asset managers.

- Risk factor reduces due to automatic diversification.

- Healthy Returns.

- Pocket-friendly Investment.

Cons

- Fluctuating returns.

- Less control on where money is invested.

- Regular evaluations may be required.

- Involves costs like fund manager's fees, exit load on early withdrawals, etc.

Question 4

What is the minimum amount that can be invested in Mutual Funds?

Accepted Answer

Investment in mutual funds can be made in two ways, i.e. in a lump sum or through an SIP. However, the minimum investment amount for both varies-

- The minimum investment amount via lump sum ranges between Rs. 1,000 to Rs. 10,000, depending upon the scheme.

- The minimum investment amount via an SIP is Rs. 100.

Question 5

What is the maturity period in Mutual Funds ?

Accepted Answer

Usually, mutual funds do not have a maturity period unless one has invested in a closed-end scheme like FMPs.