What are Mutual funds | Liquid Funds | Provident Funds | Chit Funds | Which is the most profitable fund ?
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In this blog, we will identify the best suitable funds
for you by examining your age and profession.
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| Types of Funds |
Introduction:
Usually, various types of funds are used to diversify your money and if you
have already invested in any other instrument, then Funds give you the
freedom to invest in the rest of the things in a cheaper way and to get
merged returns from them. The people who don't have enough knowledge about
stock market or investing can also use the option of funds to invest and get
safe returns. So below we will be talking about various types of funds and
when to use them to get the best returns.
There are mainly 4 types of Funds used in India such as:
|
Type of Fund |
Age recommendation |
Profession Required |
|
Mutual Fund |
18Yrs - 60Yrs |
Any profession is applicable |
Mutual Fund is also known as the all-rounder fund because in Mutual funds you
can invest in anything, for example, if you have gold investment done already
and want to invest in the stock market then there are three types of mutual
funds:
- Large-Cap Fund:
This fund will invest your money in the companies in the stock market, which
have their market capitalization or value enormous. And usually, these types
of funds are somewhat risk-free and also give fewer returns as compared to
other funds.
- Mid-Cap Fund:
This fund diversifies your investment in the stocks, which are a little less
in value as compared to the large-cap stocks, and also these stocks have the
potential to be a large-cap stock. The returns depend on the stocks invested
and have a more risk-reward than the large-cap funds.
- Small-Cap Fund:
This fund is very much risk as compared to the above two funds because it
invests your money in the stocks which are recently launched in the market or
startups which have a failure rate of 85%. If luckily one of the stock grows
exceptionally, it can give you very huge returns. And it also has the biggest
risk-reward ratio.
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| Types of Mutual Funds |
The Mutual funds also have very safe and profitable funds which are known as
ETFs (Exchange-Traded Fund).
What is the ETF (Exchange-traded Fund)?
ETF is a fund that invests in all the stocks which are present in the Indexes
such as Nifty50 and Sensex, and the only point of investing in this fund is
when the market is crashed or in a big recession.
Because when market crashes all the stocks in Nifty50 are crashed which result
the market to crash and if we see the history, we can observe that 'Market
always recovers' that means when it's crashed we can buy the ETF's which will
result in the buying of Branded and most valued companies at a very cheap rate
and when the market will recover, it can give you up to 40-50% returns,
returns usually depend on how much the market is fallen or crashed.
There are many types of mutual funds one of which is also tax-saving funds so
if you invest in that funds you will earn a return not very much but it will
save your taxes and you won't be needing to pay your taxes if you invest in
it. The other mutual funds are not very broadly used and also not give many
good returns.
Invest in any Mutual funds and ETFs with zero extra charges and free account
opening.
Liquid Funds:
|
Type of Fund |
Age recommendation |
Profession Recommended |
|
Liquid Fund |
40Yrs to Lifetime |
Suitable for retired persons and not recommended for young people |
Liquid funds are the safest investments, and there is risk close to nothing,
therefore these investments are for those who want their future secured and
get returns compared to FD e.g. 9%.
But they are the best alternatives for FD's because in Fixed Deposit you
cannot withdraw your invested amount and even if you manage to withdraw it,
you will be charged with a fee of up to 2% of your investment. And in Liquid
Funds you don't have to worry about withdrawals because you can withdraw your
amount from your phone and the money will reach under 24 hours which is very
fast, this is the reason they are called liquid funds.
You can invest the amount you want. They have a very flexible procedure for
adding and withdrawing money which makes it very useful and no charges are
levied on the transactions.
Liquid funds usually invest in Bonds, which are run by the government and also
many types of stocks which have regular growth and are risk-free, they also
invest in gold and silver but mainly their focus is on risk-free investments
and regular growth.
One great Liquid fund is
ICICI Prudential Liquid Fund
which I personally use and want to recommend you because of its simple mobile
UI and also you get rewarded every time you invest in the Fund, which is the
unique thing that no fund offers.
Click the link and open the account you will get a withdrawable
Welcome Bonus of 100Rs in your account. The app is available on the
play store named as Easy plan
Set goals, Earn better than bank returns & Withdraw any time.
Start with just Rs.100!
Use my link for a surprise bonus, valid for 7 days
Provident Fund:
|
Type of Fund |
Age recommendation |
Profession Recommended |
|
Provident Fund |
During Job Years |
It is given by companies to their employees |
Provident is needed to be taken from the companies which you work in.
Usually, companies inform you about that, and if not then you can for
it.
Provident fund give returns in a way that the investment amount is taken
from your monthly wages and it is a tiny percentage of your wage which you
can barely notice and the amount is transferred to your provident fund and
it is only disbursed when you retire or you leave the company before
retirement.
There is a decent interest earning on provident funds of 4-6% which matures
till your retirement and you get it after your retirement which helps your
in your future expenses you can also get it in one time and can also apply
for disbursement through monthly wages similarly to pension. But pension is
for a lifetime after retirement and Provident funds are limited and can
expire after the whole disbursement, but they are also good investment
opportunities for employees who cannot invest in other funds.
Chit Funds:
|
Type of Fund |
Age recommendation |
Profession Recommended |
|
Chit Fund |
Not specific age |
Hotel Owners, Vegetable shop owners and communities of workers |
Chit funds are usually used by shop owners, gaadiwala's or community of any
types of shops where they save a small amount in a fund which is mostly
offered by the State Government or any other private organization where
every person in that community invests a small amount in the fund and
usually when a crisis occurs or when the community needs the
money.
They get everyone's permission and can withdraw the money to survive the
crisis of the requirement with that fund and they also earn interest on that
fund as the government invests it in bonds and the private organizations
also invest it in some safe instruments.
The Chit fund is usually not regulated by the rules of RBI and come under
the Chit Fund Act of Govt., it has the rules which are applied by the Chit
fund managers and are also flexible for use.
These funds are not for common people but useful for the people who run
their own businesses in a community.
Thank you for reading the Blog. Leave us comment if you have any
suggestions or doubts.
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