MUTUAL FUND

Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities, while stocks represent ownership in a single company.

Types of mutual funds include equity funds, bond funds, money market funds, index funds, sector funds, and balanced funds.

Investors can invest in mutual funds through brokerage firms, financial advisors, or directly with the fund company. Many mutual funds also offer the option of investing through a systematic investment plan (SIP).

Benefits of investing in mutual funds include diversification, professional management, liquidity, ease of investment, transparency, and the potential for higher returns.

Certain types of mutual funds, such as equity-linked savings schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act. However, it's important to consult with a tax advisor for personalized advice.

Basic concepts of mutual funds include NFO, net asset value (NAV), expense ratio, load, and management fees.

An NFO (New Fund Offer) is a type of mutual fund launch where a new fund is opened for subscription by investors for the first time.

NAV (Net Asset Value) is the per-unit value of a mutual fund scheme's assets minus its liabilities. It is calculated by dividing the total value of the scheme's assets by the number of outstanding units.

SIP (Systematic Investment Plan) is a method of investing in mutual funds, where a fixed amount is invested at regular intervals (such as monthly or quarterly).

KYC (Know Your Customer) is a process of verifying the identity and address of investors who want to invest in mutual funds. It is mandatory for all mutual fund investors in India.

Expense ratio is the annual fee charged by a mutual fund company to manage its funds. It includes various expenses such as management fees, administrative costs, and other operational expenses. The expense ratio is expressed as a percentage of the fund's total assets under management.