Invest in Mutual Funds
Mutual funds are investment vehicles that pool money from investors. The money is then invested across a wide variety of assets like stocks, bonds, gold, etc. depending on the investment objective to earn returns.
How do mutual funds work?
- A mutual fund is set up by the Sponsor or Promoter. An asset management company (AMC) is appointed to oversee and manage the fund’s portfolios.
- An investor puts in money in a mutual fund scheme in exchange for units. Some fund units can be bought only during a New Fund Offering, while some can be bought any time.
- This money collected from a pool of investors is then used to purchase stocks, bonds, money-market instruments, government securities, ETFs, gold and so on. The scheme’s prospectus will give a detailed idea about the kind of assets that will be purchased.
- The AMC generally charges a small fee for managing the assets
- The portfolio is managed by the AMC. They regularly buy and sell the assets. Any profits made would be distributed amongst the investors as dividends.
What does Kotak Securities offer?
- Purchase and redeem mutual funds online.
- Track your mutual funds and get monthly updates.
- Seamless link between your mutual fund scheme and bank account.
- Systematic investment plan options.
- No transaction charges or fees on the investment.
- Receive SMS updates on the transactions.
What are the benefits?
Over the years, mutual funds have emerged as a highly popular investment option among investors in India and across the globe. Here’s why mutual funds are beneficial:
- Diversification: Mutual funds give you access to a diversified portfolio. If you had to invest directly, you would have had to shell out a lot of money for diversification. In contrast, using a minor amount, you can have access to a portfolio with investments across mutliple stocks or bonds.
- Professional management: As an investor, you conduct your own research before buying a stock or bond. However, there are so many options out there that it can become confusing. A mutual fund, however, allows you to save time and resources in this research. Experts in the asset management company will be investing on your behalf through a mutual fund.
- Timing: In the stock market, timing is one of the most important factors. A mutual fund allows you to sit back and relax, and not worry about buying or selling at the right time.
- Transaction cost: When you buy a stock or bond, you have to pay a small amount as fees every time. Imagine, if you were to buy a hundred assets to diversify your portfolio, you had to pay a charge for each of them. This is not so for a mutual fund. All you have to do is pay a small fee once.