Mutual Fund
Pooled money invested by a professional fund manager.
What does it mean? (Simple)
A mutual fund collects money from many investors and invests it in stocks, bonds, or other assets. A professional fund manager decides where to invest.
There are many types: equity funds (stocks), debt funds (bonds), hybrid funds (mix), and more. Each has different risk levels and potential returns.
Mutual funds are regulated by SEBI and are a good way to invest in the stock market without picking individual stocks yourself.
Example with ₹ numbers
You invest ₹10,000 in an equity mutual fund. The fund manager uses this money (along with money from thousands of other investors) to buy shares of companies like HDFC, Infosys, TCS, etc.
Common mistakes to avoid
- ⚠️Judging funds by recent 1-year returns
- ⚠️Not understanding the expense ratio
- ⚠️Investing in too many similar funds
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⚠️ Educational only: This explanation is for learning purposes. Please consult a financial advisor for personalized advice.