Today investors have many ways to invest in the market. Mutual funds also give good opportunities to investors to invest in the market. Investing in mutual funds for short duration always carries the risk of loss of returns, especially when investing in equity oriented funds except in balance and debt funds. But the returns on long-term investments in the last few years cannot be ignored. Long term investments in mutual funds are attracting a lot of investors. In this type of investment, one’s money is kept safe and secondly it also gives them good returns.
History of Mutual Funds
India’s first mutual fund came in the form of Unit Trust of India in 1963. In the era of liberalization, the government allowed public sector banks and institutions to bring mutual funds. In 1992, SEBI passed a bill under which investors’ money in the market should be protected and the security market should be controlled. As far as mutual funds are concerned, SEBI notified regulations regarding mutual funds in 1993. Since then, private sector companies have been allowed to enter mutual funds. SEBI from time to time makes rules to protect the money of investors and issues various guidelines.
Meaning of mutual fund
Mutual Funds As the name suggests, the money of many people is invested in one fund. In mutual funds money is collected from various investors and this money is invested in shares and bond markets. Units are allotted to the investor for his money. Now in proportion to these units, mutual fund houses distribute the profits of buying and selling shares or bonds among the fund (unit) holders.
Mutual fund holders get this dividend or all expenses incurred on dividend fund like AMC (Asset Management Company) charges, admin expenses, agent’s commission etc. Usually mutual funds are launched in the market from time to time under one scheme. It is necessary for any mutual fund to register its name with the Securities and Exchange Board of India (SEBI).
You can invest in mutual funds on your own or take the help of a borrower to make the investment. For this you need to open a bank demat account. It is better for investors to adopt a Systematic Investment Plan (SIP), in which complete planning is done about the tenure and how much to invest.
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