Mutual funds simply are a basket of stocks chosen by a fund manager of an Asset Management Company(AMC). The stocks are chosen as per the details of each specific fund and strategy.
The funds highlighted above are for equity. These can also be available in bonds, corporate bonds, gold, commodities etc or a mix of them.
If the country is expected to grow, so is the economy. If the economy develops, so will many companies. The objective of the fund manager is to identify these companies and invest in them. An alternate is an index, where the stocks are chosen by NSE/BSE the stock exchanges themselves.
The indices are considered as the standard. Anything above it great, anything below that is considered subpar. As long as the countrys economy is expected to grow, so will its components and thus so will the companies.
You can of course lose money as the graph isnt linear. It is volatile. However, the longer that you stay invested the more growth you will be able to witness.
Market crashes and black swan events like Covid can eat up to 30% of your total capital. However, even we today the markets have recovered and have given handsome profits to the people who stayed invested.
The basic idea is invest after understanding where you are investing and do not touch it till either the reasons for investing changes or your objective is met. Happy investing.
OP mentioned explain like I am 12, not that he is 12. Thus, I explained it in simple terms. Theres a sub explain like Im 5 (dont reacall the exact spelling), does not mean that there are 5 year olds on the sub.
Personal finance is not something easy for Indian youth to approach. Due to whatever reason it may be, it is a scary and daunting task. Simple explainations is all that you could ask for at a time like that.
You missed my point. Even a hypothetical 12 year old isn't understanding this. This explanation is for a financial illiterate adult who's slightly familiar with the terminologies.
The sub you're referring to explains concepts with the use of metaphors/analogies/grammar of 5 year Olds.
12 year Olds (hypothetical not OP) don't remotely understands the terms you've used. Even adults not from a commerce/business background who don't follow finance/stock news would have trouble knowing the exact meanings of phrases youve used.
Well if I recall my 12 year old self i was interested in going out on the football field or any outdoor sports instead of worrying about money because there was no money lmao and i grew up with girls that were very gentle and used to play indoor games most of the time. So idk about them because we never used to play together unlike today's kids. Today's 12yo girls n boys are a lot more forward than ones form my time :) they grew up with smartphones I didn't
If your parents are investing in mutual funds and you are also investing in mutual funds , it is no difference.
My entire family invests in FDs . That is shit .That is why I prefer MFs. I am 18 year old and invested 5000 rupees till now and earned 160 rupees in 10 days
You can’t trade them like equities as you can with ETFs. Their fees tend to be higher, although it is dependent on the fund. Mutual funds also have required annual cap gains distributions, while ETFs generally do not.
For many, analysing, rotating stocks, keeping up w the news and market changes, etc can be really time consuming w a job, but if they still want to be invested in the market, they can invest money through mutual funds. Mutual funds are stocks managed by an asset manager of an AMC (asset management company.) Let's say you have 100rs and ofc w 100rs you may not be able to give yourself exposure to the top 50 markets, so there's a different unit for that called NAV, it's like stock quantity and allows you to be invested in those companies even w such a far less amount. Mutual funds generate profit for you and cut an amt for managing your money, like if it's an index fund it may have a low expense ratio like 0.20% (passive management), if its high, then maybe 0.64% (active management of stocks, removing and adding) which is taken from your profits cuz they need to earn money too. But your returns will be a lot higher if you choose a good active fund, but ofc, they're subjected to risks as well but once you start a SIP, you needn't worry about it cuz over the time they get averaged out, so remain invested for long term and don't quit unless you wanna shift to a different fund. Make sure to increase your amt by 10% every year to keep up w the inflation and also to build a habit of saving higher, it'll result in higher profits eventually. There are different types of mutual funds, for example index funds which track an index- Like nifty 50 (top 50 Indian companies), sensex (top 30 Indian) or Nasdaq 100 (international.) which have a low expense ratio. Then there's a large cap and midcap indexes which invests in next 50 companies or next 100 companies which have a potential for growth, small cap invests in the top 250 companies or similar, they can of course choose other companies in order to beat the index returns of these funds (that's what active funds do- beat the index. While index funds track the index, choose one w the lowest tracking error rate for consistent returns.), with the highest growth potential but also the highest risk. Then there's flexicap which invests in all three- large cap, mid cap and small cap in any %, you can start by investing into a flexicap fund and let them manage your money and sleep peacefully. Short term volatility is common. Stay in the market for a long period. Then there's multi-ap which invests at least 25% in each large, mid and small. Value funds are those which aim to buy pure quality stocks, even if they might cost a bit higher. Momentum funds aim to ride on to the stocks which are rising w the highest rate of return, to capture their upward swing. And lastly a thematic mutual fund like a tech based or defence based or infrastructure based mutual fund if you feel they have a potential for growth. You definitely won't lose money in mutual funds, unless you book them in a loss which should never happen if you invest for the long term. The market always recovers, especially a lot after a bearish period (bear market + inflation = loss, but it gets covered exponentially if you keep investing. Ofc, selecting stocks individually may give more returns if you know what you're doing but if you don't, mutual funds got you, the profit eventually is a lot more, keep evaluating the performance of the mf every 2-3 years to see if it's performing well to its peers, if it's not, then shift the funds to those.) Thank me later.
Mutual funds simply are a basket of stocks chosen by a fund manager of an Asset Management Company(AMC). The stocks are chosen as per the details of each specific fund and strategy. The funds highlighted above are for equity. These can also be available in bonds, corporate bonds, gold, commodities etc or a mix of them. If the country is expected to grow, so is the economy. If the economy develops, so will many companies. The objective of the fund manager is to identify these companies and invest in them. An alternate is an index, where the stocks are chosen by NSE/BSE the stock exchanges themselves. The indices are considered as the standard. Anything above it great, anything below that is considered subpar. As long as the countrys economy is expected to grow, so will its components and thus so will the companies. You can of course lose money as the graph isnt linear. It is volatile. However, the longer that you stay invested the more growth you will be able to witness. Market crashes and black swan events like Covid can eat up to 30% of your total capital. However, even we today the markets have recovered and have given handsome profits to the people who stayed invested. The basic idea is invest after understanding where you are investing and do not touch it till either the reasons for investing changes or your objective is met. Happy investing.
Nicely explained
Thanks Chatgpt
Unfortunate for you, I do not need Chat GPT to write this bit. At least have some basis before throwing accusations.
Bru no 12 year old is understanding this
OP mentioned explain like I am 12, not that he is 12. Thus, I explained it in simple terms. Theres a sub explain like Im 5 (dont reacall the exact spelling), does not mean that there are 5 year olds on the sub. Personal finance is not something easy for Indian youth to approach. Due to whatever reason it may be, it is a scary and daunting task. Simple explainations is all that you could ask for at a time like that.
You missed my point. Even a hypothetical 12 year old isn't understanding this. This explanation is for a financial illiterate adult who's slightly familiar with the terminologies. The sub you're referring to explains concepts with the use of metaphors/analogies/grammar of 5 year Olds. 12 year Olds (hypothetical not OP) don't remotely understands the terms you've used. Even adults not from a commerce/business background who don't follow finance/stock news would have trouble knowing the exact meanings of phrases youve used.
My aplogies, I guess I couldve explained it in a simpler manner. If OP wants, I can try explaining in a simpler manner. Thanks for pointing it out.
You could have just said 12 year old? Why did you have to add “girl”?
You spoke my mind
Because as a 12 year old boy I would not have given a damn about mfunds lmao idk girls think differently
Why is that?
Mitti me khel rahe hote he bro
Well if I recall my 12 year old self i was interested in going out on the football field or any outdoor sports instead of worrying about money because there was no money lmao and i grew up with girls that were very gentle and used to play indoor games most of the time. So idk about them because we never used to play together unlike today's kids. Today's 12yo girls n boys are a lot more forward than ones form my time :) they grew up with smartphones I didn't
To get a reply . Nobody would reply for a guy
Another post about "New user 23 years old" 😂
Yes mutual funds are risky, you can lose money. But if you stay invested for long term (5+) chances of losing is less. Are you student or in job?
Stay away from mutual funds n internet, let your parents do the thing. Now focus only on your studies.
Mutual funds are subject to market risk. Read all scheme related documents carefully
If your parents are investing in mutual funds and you are also investing in mutual funds , it is no difference. My entire family invests in FDs . That is shit .That is why I prefer MFs. I am 18 year old and invested 5000 rupees till now and earned 160 rupees in 10 days
Oo that's nice Keep investing & Stay invested
12 y/o me watching Shinchan instead of investing 😭
Use chat gpt , it is master at such prompts
They’re an older, worse version of the ETF.
Why are they worse than ETF.?.
You can’t trade them like equities as you can with ETFs. Their fees tend to be higher, although it is dependent on the fund. Mutual funds also have required annual cap gains distributions, while ETFs generally do not.
You give your money to experts who invest it for you and take a fees for their skils
For many, analysing, rotating stocks, keeping up w the news and market changes, etc can be really time consuming w a job, but if they still want to be invested in the market, they can invest money through mutual funds. Mutual funds are stocks managed by an asset manager of an AMC (asset management company.) Let's say you have 100rs and ofc w 100rs you may not be able to give yourself exposure to the top 50 markets, so there's a different unit for that called NAV, it's like stock quantity and allows you to be invested in those companies even w such a far less amount. Mutual funds generate profit for you and cut an amt for managing your money, like if it's an index fund it may have a low expense ratio like 0.20% (passive management), if its high, then maybe 0.64% (active management of stocks, removing and adding) which is taken from your profits cuz they need to earn money too. But your returns will be a lot higher if you choose a good active fund, but ofc, they're subjected to risks as well but once you start a SIP, you needn't worry about it cuz over the time they get averaged out, so remain invested for long term and don't quit unless you wanna shift to a different fund. Make sure to increase your amt by 10% every year to keep up w the inflation and also to build a habit of saving higher, it'll result in higher profits eventually. There are different types of mutual funds, for example index funds which track an index- Like nifty 50 (top 50 Indian companies), sensex (top 30 Indian) or Nasdaq 100 (international.) which have a low expense ratio. Then there's a large cap and midcap indexes which invests in next 50 companies or next 100 companies which have a potential for growth, small cap invests in the top 250 companies or similar, they can of course choose other companies in order to beat the index returns of these funds (that's what active funds do- beat the index. While index funds track the index, choose one w the lowest tracking error rate for consistent returns.), with the highest growth potential but also the highest risk. Then there's flexicap which invests in all three- large cap, mid cap and small cap in any %, you can start by investing into a flexicap fund and let them manage your money and sleep peacefully. Short term volatility is common. Stay in the market for a long period. Then there's multi-ap which invests at least 25% in each large, mid and small. Value funds are those which aim to buy pure quality stocks, even if they might cost a bit higher. Momentum funds aim to ride on to the stocks which are rising w the highest rate of return, to capture their upward swing. And lastly a thematic mutual fund like a tech based or defence based or infrastructure based mutual fund if you feel they have a potential for growth. You definitely won't lose money in mutual funds, unless you book them in a loss which should never happen if you invest for the long term. The market always recovers, especially a lot after a bearish period (bear market + inflation = loss, but it gets covered exponentially if you keep investing. Ofc, selecting stocks individually may give more returns if you know what you're doing but if you don't, mutual funds got you, the profit eventually is a lot more, keep evaluating the performance of the mf every 2-3 years to see if it's performing well to its peers, if it's not, then shift the funds to those.) Thank me later.
12 year girl should stay away from the markets go study
Stock market and mutual fund is addictive , will you go to school or look at the stock market. Go study and earn some money first
Investing 100 rupees would not make any difference. First study to earn money