What is a mutual fund?
A mutual fund is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets, managed by professional fund managers.

How do mutual funds work?
Investors buy units of a mutual fund scheme, and the pooled money is invested in various securities. The returns depend on the performance of the underlying assets.

What are the types of mutual funds?
Mutual funds can be classified based on structure, investment objective, or asset class. Some common types include:

• Equity Funds (invest in stocks)

• Debt Funds (invest in bonds)

• Hybrid Funds (mix of equity and debt)

• Index Funds (track a market index)

• ELSS (Equity Linked Savings Scheme) (tax-saving funds)

Investment & Returns

What is SIP in mutual funds?
A Systematic Investment Plan (SIP) allows you to invest a fixed amount at regular intervals, helping in rupee cost averaging and disciplined investing.

What is the difference between SIP and lump sum investment?

• SIP: Invests a fixed amount periodically, reducing the impact of market volatility.

• Lump Sum: A one-time investment, suitable when markets are low or for long-term investments.

What kind of returns can I expect from mutual funds?
Returns vary based on market conditions and fund type. Equity funds may offer 10-15% annualized returns over the long term, while debt funds offer lower but more stable returns.

Are mutual funds risky?
Yes, mutual funds carry market risks. However, different types of funds have varying risk levels. Equity funds are high-risk, while debt funds are relatively low-risk.

Can I withdraw money from a mutual fund anytime?
Yes, except for close-ended funds and ELSS (which have a 3-year lock-in). However, exit loads may apply if withdrawn before a certain period.

What is an exit load in mutual funds?
An exit load is a fee charged by a mutual fund if you redeem your investment before a specified period, typically 0.5%-1% of the withdrawal amount.

Can I invest in mutual funds without a DEMAT account?
Yes, a DEMAT account is not mandatory. You can invest directly through fund houses, banks, or online platforms.

Are mutual funds better than fixed deposits (FDs)?
Mutual funds have the potential for higher returns than FDs but come with risks, whereas FDs offer fixed, stable returns. The choice depends on your risk appetite.