What is Mutual Fund (You Must Know!)

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What is Mutual Fund?
What is Mutual Fund?

What is Mutual Fund? – In short, a mutual fund is a pool of money managed by a professional Investment Manager. A mutual fund is a trust that raises money from a number of investors who share the same investment objectives and invest in equities, bonds, money market instruments and/or other securities. And the income/profit generated from this collective investment is distributed proportionally among the investors after deducting the applicable fees and charges, by calculating the “Net Asset Value” or NAV of the scheme. Simply put, it is the money raised by a large number of investors that makes up a mutual fund.

What is Mutual Fund?

Here’s a simple way to understand the concept of Mutual Fund Units.

What is Mutual Fund?

mutual funds
mutual funds

Here’s a simple way to understand the concept of Mutual Fund Units. Say there is a box of 12 chocolates for 40. Four friends decide to buy the same, but they only have 10 each and the shopkeeper only sells per box. So the friends then decided to collect 10 each and buy a box of 12 chocolates. Now based on their contribution, they each receive 3 chocolates or 3 units, when equated with mutual funds.

And how do you guys calculate the cost of one unit? Just divide the total by the total number of chocolates: 40/12 = 3.33. So, if you multiply the number of units (3) by the cost per unit (3.33), you get an initial investment of 10. This results in each friend becoming a unit holder in a box of chocolates that is owned collectively by all of them, with everyone being the owner. part of the box.

That’s a brief understanding of mutual funds, Hopefully this article can help those of you who are learning to invest, especially investing in mutual funds. That’s all from me, sorry if there are any wrong words from me as the author of this article and thank you for taking the time to visit the article that I made and for visiting our my method website.



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