Mutual funds are a versatile and easy-to-use money-making tool that many people use to create a solid investment portfolio.
There are many mutual fund options that can meet investors’ needs, but generally a mutual fund will either invest in stocks or debt securities.
Mutual fund schemes can also be open-ended and closed-ended. Open-ended mutual fund schemes allow you to redeem your investment at any time, while close-ended schemes have a fixed maturity period, after which you may withdraw funds.
These are five common mutual funds that you can use to make money from home.
What’s an equity fund?
It means you can invest your money in various equity segments as described in the offer document. It invests at least 65% of its capital into stocks and equity-oriented security. These funds are designed to provide investors capital appreciation over the long-term. These funds are also known as growth funds and are great for investors who have long-term goals and a high risk appetite. These funds are great for anyone who has not invested before in any investment or has a lower capital.
Gold fund
Gilt funds invest only in bonds and securities that are government-issued. They have different maturity periods. There are many types of them, including long-term and short-term gilt funds. They are highly liquid and there is no risk for defaults. These investments are sensitive to interest rates and there is only one risk: a drop in the interest rate.
What’s a debt fund?
Also known as income funds, bond mutual funds invest approximately 65% of their core capital into a variety of fixed-income securities including bonds, corporate debentures and other money market fixed–income instruments. They are less likely to be volatile than equity funds and are preferred by many for their low risk profile.
Balanced Fund
These hybrids combine the best of both equities with debt instruments to give investors capital appreciation and stability. They offer the best of both worlds as they invest about 40% in debt instruments and 60% in equities.
What’s a liquid fund?
These funds are a great investment choice for those looking for moderate returns and capital preservation. Money market funds or liquid funds invest their capital for 91 or less days in low-risk instruments such as Commercial Paper and Treasury Bills. Liquid funds are a great investment option for investors looking to get a modest return on excess capital.
Investors have many options to choose from. These funds can be high-profit, or low-risk, equity funds or liquid funds. Investors need to be aware that mutual funds can have market or systematic risks. Before investing in mutual funds, they should carefully read the offer documents.
