What are Mutual Funds?
A mutual fund is one of the most popular modes of investment opt by investors desirous of making good returns on the same. There are generally only 2 ways to invest in a mutual funds scheme- Lump sum investment and Systematic Investment Plan.Lump-sum investment refers to the investment of a good sum of money once into the scheme. It is suitable for times when you have a free load of cash in hand with you. However, the availability of a comparatively huge sum of money is not very common and this is the reason why many potential investors were unable to make investments.
How Do Mutual Funds Work?
Mutual funds are one of the most popular financial instruments in town. Mutual fund is a collection of funds pooled in by investors and managed by a portfolio manager. Such funds are invested into various schemes in accordance to the earlier set objectives.
Such mutual funds are of many types like equity funds, debt funds, hybrid funds, income funds, growth funds, index funds etc. Each fund has its own objectives, risk & reward. Different investment bankers offer different schemes. You may select the one which favors your objectives the most.
What is Stock Exchange?
Stock exchanges are markets where the participants come together for buying and selling of financial instruments such as shares, debentures, bonds, etc. it is run by set rules and regulations set by appropriate bodies such as SEBI in India. Only the securities of listed companies are traded with stock exchanges. All such stock exchanges shall be recognized by the government and only registered brokers and members are allowed to trade instruments on it.