Under Mutual fund Investment people prefer to invest for long term. Under this a mutual fund pools the deposits from a large number of small investors and invests the same proceedings somewhere else. And earning the returns on the funds invested. The returns are then distributed among the investors after deducting the expenses of the mutual funds nd it's commission.
The various important aspects of mutual funds are as:
1. Mutual funds are basically for long term. So if you have a long term goal like 10 or 15 years ahead then you may invest in a mutual fund. These are never for making short term gains.
2. The mutual funds comes with various schemes like you have load funds in which expenses are to be paid while purchasing or selling the mutual funds, no load funds under which no expenses are paid. Open ended schemes and close ended schemes. Off shore funds, on-site funds, etc So the schemes are different as per the different shareholders requirements.
3. Mutual funds are basically for those investors who want long term return and thus patience is very important while investing in mutual funds. You cannot double your money in just a year or two.
4. Mutual funds are professionally managed and thus if you do not have adequate knowledge about the schemes and the stock market it's better to invest through stock market.
5. Investment is mutual funds is subject to market risk. If any substantial change happens in the economy affecting the market. It would directly impact the mutual funds as well if that mutual fund has stake in those particular companies affected.
6. Investment can be made through SIP that is systematic investment plan. It means regular monthly investment can be made and there is no need of bulk investment.
7. The benefits of cost averaging come with the mutual funds.
Though it is advisable to go through the schemes related documents carefully.