Know the types of mutual funds in simple language

Know the types of mutual funds in simple language

How many types of mutual funds are there? Understand in simple language!

If you want to grow your money and are thinking of investing, then mutual funds can be a great option! But do you know that there are different types of mutual funds? To make the right investment decision, it is important to know which fund will be best for you. Let's understand this in simple language.

Types of Mutual Funds

Mutual funds are divided into three main categories:

1. Based on structure

Open-Ended Funds: These funds can be bought or sold at any time. They have high liquidity, that is, you can withdraw money whenever you want.

Closed-Ended Funds: These funds can be bought only at the time of launch and can be sold only after a certain period.

2. Based on investment

Equity Mutual Funds: These funds invest in the stock market. These have high returns, but the risk is also high.

Debt Mutual Funds: These invest in government bonds and corporate bonds, which reduces the risk and keeps the returns stable.

Hybrid mutual funds provide balanced returns by investing in both debt and equity.

3. Based on the goal

Tax Saving Funds (ELSS - Equity Linked Savings Scheme): These funds are best for saving tax and investing in them gives tax exemption.

Liquid Funds: If you have to invest for a short period of time and withdraw money quickly, then this fund is right.

Gold Funds: These are linked to gold and are a good way to invest in gold.

Conclusion

Mutual funds are a great investment option, but it is important that you choose the right fund according to your needs and risk bearing capacity. If you are investing for the long term and want high returns, equity funds are better. If you want stable returns and low risk, debt funds are the right choice.

So what kind of mutual funds would you like to invest in? 😊