Understanding Mutual Fund -Part 1- What is a Mutual Fund?

What is a Mutual Fund?

With lost of ads coming in the television screens "Mutual Fund Sahi Hai", I guess everyone at least is familiar with the term mutual fund

Let's understand in simple terms what is mutual fund:

"A place where pool of investors park their money and this pool of money is then managed by an asset management company(AMC). The AMC's have qualified fund manager who do the market research and then invest accordingly in different stocks, bonds etc. based on the type of fund"

For a layman Mutual Fund is just an easiest way to get started into investment.

These investments earn some gains over a time and the gains are equally distributed to the investors based on the ratio of their investment after deduction of fund management charges ,which is charged by the AMC.

A lot of people used to invest their money in FD and RD but now many people are shifting to mutual funds. The idea through post is to everyone aware about the basics of mutual fund.

In India currently we have 44 AMC (Asset Management Companies) and they have more than 2500+ mutual fund schemes. As per AMFI India (May2021), the AUM(assets under management) stood at ₹33.06 Trillion (₹ 33.06 Lakh Crore) as on May 31, 2021.