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Category: Investment

  • What is SME IPO? Is investing in it good?

    What is SME IPO? Is investing in it good?

    SME IPO refers to small and medium-sized enterprises’ initial public offering. It was launched in 2012 by the Indian Stock Exchange and SEBI to help small and medium-sized businesses raise funds. The National Stock Exchange (NSE) SME platform is EMERGE, and the Bombay Stock Exchange (BSE) SME platform is BSE SME. You can invest in it using any of the online stock broking platforms. But the question raises what SME IPO is, whether it benefits you, how it’s different from general IPO, and whether it’s safe or not. In this blog, we have talked all about SME IPOs.

    What is an SME IPO?

    SME IPO is a process through which small and medium-sized companies go public to generate funds. A company with a minimum net worth and profit of 5 crores in 2 years out of 3 consecutive years or a minimum net worth and profit of 25 crores in 3 years out of any 5 years is eligible for SME IPO (Small and Medium-sized Enterprises Initial Public offering). Investors, traders and individuals can invest in SME IPO by purchasing equity like they do for a general IPO.

    Difference between SME IPO and Main Board IPO

    SME IPOs and Main Board IPOs allow companies to go public and investors to buy equity in them. Both help the companies in generating funds. However, both of them include specific differences.

    • SME IPO is for companies with a maximum capital of Rs. 25 crore, and the mainboard IPO is for companies with a minimum capital of 60 crore.
    • The companies that get listed for SME IPO can be not well-known. Whereas companies listed in IPOs used to be popular.
    • IPOs launched by large enterprises are more trustworthy than those projected by SMEs.
    • Growth in IPOs can reflect immediately.
    • Gaining profit in SMEs can be a long-term investment.
    • SME shares get traded in lots. Meanwhile, in an IPO, the shares get sold in numbers.

    Advantages of Investing in SME IPO

    1.    High Growth Potential

    Since SMEs are small enterprises, they hold an excellent opportunity to grow and cover the market. With SME IPO, companies get recognised, generate funds and become valuable. SME allows the company to grow. Now that the company grows, the value of your purchase stock grows. In 2023, 26 SME IPOs gave 100% returns after listing.

    2.    Diversification of Your Investment

    With the investment in SME IPOs you can diversify your investment with many companies. With the investment in an SME IPO,  you can  mitigate the stock market risk by diversifying your investment among different companies and industries.

    3.    Multiple Investment Opportunity

    You can find different companies of various industries listed in SME IPOs. It allows you to invest in multiple companies, industries, and potential brands. With an SME IPO, you will have more investment alternatives.

    4.    Support to Business

    With SME IPO, you can offer help to businesses. Investing your money in them can create a positive environment for the companies. However, invest in such SME IPOs where you find potential to grow.

    5.    Competitive rate

    The equity price for SMEs is low when compared to the mainline IPO. It means that you can create capital with lower investment in SME IPO. The companies set the minimum investment amount in the SME IPO. The maximum investment amount in the SME IPO is fixed to Rs. 5 Lakh.

    Disadvantages of Investing in SME IPO

    1.    High Risk

    The investment with SMEs comes with high earning potential. It holds equal risk. There can be chances that the IPO launched by an SME doesn’t work in the market and fails to raise funds, resulting in a loss of your investment. Moreover, SMEs are highly affected by market volatility, making it highly risky to invest.

    2.    Lot’s of research required before investing

    Small and medium enterprises are less known, making them less credible. You must research from scratch to learn about past performance and future business predictions. You must consider products/services, their upcoming trends, target audience and more before making the investment decision.

    3.    Limited disclosure

    Since the company is less known, there can be less information about it. The limited disclosure about SME IPO can impact your investment decision.

    4.    Lack of liquidity

    Liquidity refers to how smoothly you can sell and buy stocks without changing prices. SME IPOs include a lack of liquidity, which means sometimes it can be challenging to sell the stocks when you want to, and this may result in a loss to you.

    Should You Invest in an SME IPO?

    Now that you know the advantages and disadvantages of investing in an SME IPO, you might think about whether or not you should invest in it. It answers that it depends on several factors such as:

    1.    Your risk bearing appetite

    Investing in SME IPO is associated with high risk. You must consider your risk bearing capacity before investing in SME IPOs.

    2.    Potential of the Company

    You can look at which kind of company listed for the SME IPO. Does the company have a futuristic approach? Whether it solves any problem for its end user or not. Decide by collecting information from different sources, research papers, etc., to invest in SMEs’ stocks.

    3.    Finance Management Skills

    If you want to diversify the fund, SME IPO can be a better option. However, to do it effectively,  your finance management skills are crucial.

    Investment with SME IPO allows you to build capital by buying stocks in lots. It will help you grow exponentially if the company performs well in the upcoming future. Moreover, through it, you will positively impact the business environment. Your small investment can be a hope for a company to raise funds and grow.

    How to Invest in SME IPO

    If you’ve decided to invest in SME IPOs, you can follow the below-mentioned s

    1.    Find an Online Trading Platform

    There’re several online trading platforms. You can analyse different platforms and select an online trading platform for your investment based on brokerage charges, authorisation, and convenience.

    2.    Sign in/Sign Up

    Download your preferred stock trading app and sign in using your user Id and password/pin. However, if you’re new to the platform and investing in stocks for the first time, you must sign up.

    3.    Open Demat Account

    Once you sign up, proceed to open your demat account. You’ll need to fill out the Demat account opening form, do the KYC verification and submit certain documents. Some essential documents to open a demat account are:

    • Bank Account & Cancelled Cheque
    • Proof of Address
    • Proof of Identity
    • Pan Card
    • Photograph
    • E-sign
    • IT return or payslip (optional)

    4.    Wait for verification

    Once you create a demat account, you’ll need to wait to get it approved. Verifying the demat account can happen in a few hours to 48 hours.

    5.    Check for SME IPOs

    On the online trading platform, you can check different SME IPOs listed. You can look at the current and upcoming IPOs.

    6.    Research about the listed SME IPOs

    Once you check the SME IPOs. Study about the company, its current status, and future potential. You can also study the closed SME IPOs to identify their risk and profit factors.

    Best Industry for the Investment in SME IPO

    Technology-based Product Manufacturing Company

    If you’re considering investing with SME IPOs, a technology-based product manufacturing company can be the best option. It has been seen that small and medium-sized companies that manufacture technology products close at higher rates than their issue price. Examples are Australian Premium Solar (India) Limited- SME IPO, Akanksha Power and Infrastructure Limited – SME IPO, and Supreme Power Equipment Limited – SME IPO.

    Service-based company

    Another industry that is booming is service-based. They act as a bridge between producers and customers. These companies solve the problem of users, holding a great future. These kinds of company’s SME IPOs also succeed in the market. Examples are Maxposure Limited- SME IPO, Konstelec Engineers Limited – SME IPO, Kay Cee Energy & Infra Limited – SME IPO, Trident Techlabs Limited  – SME IPO etc.

    Ed-tech company

    The field of education is emerging with technology, creating a great opportunity. SMEs launched by ed-tech service companies are also booming, increasing high potential—for example, Addictive Learning Technology Limited (Lawsikho)- SME IPO.

    Healthcare industry

    Healthcare is such an industry that it is an integral part. Companies/organisations associated with this industry have great opportunities, allowing you to invest in SME IPO without worry—for example, Medi Assist Healthcare Services Limited.

    E-commerce Platform

    The way people are shifting to online instant delivery, e-commerce platforms create a huge opportunity. You can consider investing in it. Such an e-commerce platform involved in selling goods and services is Kaushalya Logistics Limited; its SME IPO closed at a higher rate than its issue price.

    Conclusion

    SME IPO is an opportunity for businesses to collect funds. At the same time, it’s an opportunity for investors and traders to diversify their investment in the stock market and expect higher returns with the company’s growth. Investing in an SME can be a good decision if you consider your financial condition and risk-bearing capacity, do proper market research, and select the right company to invest in.

     

     

  • What is the purpose of a Registered Education Savings Plan?

    What is the purpose of a Registered Education Savings Plan?

    In the journey of preparing for a child’s educational future in Canada, one of the most strategic tools available to families is the Registered Education Savings Plan (RESP). This specialized savings plan is an indispensable financial tool designed to support parents and guardians in accumulating funds for their children’s post-secondary education. Through this blog, we will delve into the nuances of the Registered Education Savings Plan, examining how it functions as an effective savings plan insurance for education and its pivotal role in educational financial planning.

    The concept of saving for education is not new, but the RESP brings a structured and government-supported approach to this endeavour. In an era where education costs are steadily rising, having a dedicated savings plan that offers tax advantages and government grants is invaluable. The RESP is more than just a savings account; it’s a long-term financial commitment to a child’s academic success. It allows families to start saving early in a child’s life, ensuring that the necessary funds are readily available when the time comes for post-secondary education. This blog aims to comprehensively understand how the RESP works and why it is a crucial element in planning for a child’s future.

    What is a Registered Education Savings Plan? 

    The RESP in Canada is a dynamic, tax-advantaged savings plan specifically tailored for accumulating funds for a child’s post-secondary education. It allows parents, relatives, or friends to contribute towards a child’s future education costs with the benefit of tax-deferred growth. This plan is not just a savings account; it’s a strategic investment in a child’s educational future.

    An RESP stands out for its focus on education. Contributors to the plan, known as subscribers, can open an RESP for a beneficiary – typically a child or grandchild – and start contributing funds. These contributions aren’t tax-deductible, but they grow tax-free within the plan. This means that the investment income generated, whether it’s from interest, dividends, or capital gains, isn’t taxed as long as it remains in the plan. This tax-free compounding allows the funds within the RESP to grow more efficiently over time.

    The unique feature of an RESP is its eligibility for government grants. The most notable is the Canada Education Savings Grant (CESG), which matches a percentage of the annual contributions. This grant significantly enhances the growth potential of the RESP, making it a powerful tool in education planning. Understanding the intricacies of RESP and leveraging these government contributions is key for families looking to maximize their savings for education.

    The Core Purpose of RESP 

    The core purpose of the Registered Education Savings Plan is to offer families in Canada a proactive and advantageous way to save for the increasingly significant costs of post-secondary education. With the RESP, contributions grow tax-free until they are withdrawn for educational purposes. This growth, compounded over the years, can result in a substantial fund by the time the beneficiary is ready for college or university.

    The RESP serves a dual purpose. Firstly, it addresses the immediate need to save for future education costs. The rising expenses associated with post-secondary education – including tuition, books, and living costs – can be daunting. An RESP helps to mitigate these costs by allowing families to save and grow their contributions over time. Secondly, the RESP serves as a financial planning tool. It encourages families to adopt a long-term perspective on education funding, helping them to avoid last-minute financial stress or burdensome student loans.

    Another key aspect of the RESP is the access it provides to government-funded education grants. The most prominent of these is the Canada Education Savings Grant (CESG), which matches a portion of the annual contributions up to a lifetime maximum per beneficiary. This grant not only boosts the savings in the RESP but also underscores the government’s commitment to supporting education. The combined effect of tax-free growth and government grants makes the RESP an invaluable tool in educational planning.

    RESP as a Savings Plan Insurance for Education

    While not insurance in the traditional sense, the RESP serves as a savings plan insurance for education. It provides a reliable and growing fund that can be used specifically for education-related expenses. This plan ensures that when a child is ready to embark on their post-secondary education journey, the necessary financial resources are available, reducing the reliance on student loans or other forms of financial aid.

    The concept of using the RESP as a savings plan insurance for education is grounded in its design to safeguard a child’s educational future. Parents and guardians can start an RESP early in the child’s life and make regular contributions. Over time, these contributions, coupled with tax-free growth and government grants, accumulate into a significant educational fund. This proactive approach to saving not only eases the financial burden when the time comes for higher education but also provides peace of mind, knowing that funds are available.

    An RESP also offers flexibility in how the funds can be used. When the beneficiary enrolls in a qualifying post-secondary educational program, the accumulated funds in the RESP can be withdrawn to pay for various educational expenses. These can include tuition fees, textbooks, and even living expenses. This flexibility makes the RESP a versatile tool in education financing, adapting to the diverse needs and circumstances of students.

    Long-Term Benefits of an RESP 

    The long-term benefits of a Registered Education Savings Plan extend beyond merely accumulating funds for education. The RESP is an investment in a child’s future, providing a structured and financially advantageous way to make sure that higher education is not only accessible but also affordable. By planning ahead with an RESP, families can significantly ease the financial pressure associated with post-secondary education.

    Moreover, the RESP plays a vital role in fostering a culture of saving and financial planning within a family. It instills the value of education and the importance of preparing for future expenses. This educational aspect of the RESP is as crucial as its financial benefits. It teaches both parents and children the significance of foresight in financial matters and the benefits of long-term planning.

    Another long-term benefit is the psychological comfort that comes with being financially prepared for education. The stress associated with funding higher education can be overwhelming for both parents and students. An RESP alleviates this stress, allowing students to focus on their academic pursuits without the added worry of financial constraints. Additionally, by reducing the need for student loans, an RESP minimizes the burden of post-education debt, setting the stage for a more financially secure start to adult life.

    Conclusion

    In summary, the Registered Education Savings Plan is a cornerstone in education funding in Canada, providing families with a structured, beneficial, and government-supported way to save for a child’s higher education. As a savings plan insurance for education, it not only ensures financial readiness but also brings peace of mind to families, knowing that they are well-prepared for the educational expenses ahead.

    Understanding and utilizing an RESP is a wise decision for any family planning for future education costs. It represents not just a financial commitment but also a commitment to the value of education and the importance of long-term planning. The RESP stands as a testament to the proactive steps families can take to secure their children’s educational futures, reinforcing the belief that education is a vital investment in a child’s growth and success.

    For families in Canada, embracing the benefits of an RESP is an essential step in financial planning for education. It’s a decision that paves the way for academic opportunities and opens doors for future success. By adopting the RESP as part of their financial strategy, families can confidently navigate the path to educational achievement and beyond.

     

  • How to maximise your wealth by investing in mutual funds?

    How to maximise your wealth by investing in mutual funds?

    Most successful mutual fund investments come with a solid goal and a game plan to achieve it. Some investors may try to appreciate their investment with little risk, while others try to maximise their growth regardless of the risk. The goal here usually depends on your risk tolerance.

    There are plenty of ways to stay conservative here. For instance, you could look for mutual funds online that primarily invest in debt. But how do you invest when you want to maximise your capital appreciation through mutual fund investments?

    Read on to explore some methods you can use to try and achieve maximum returns.

    Equities versus debt

    Before exploring ways to maximise mutual fund returns, it is important to understand the characteristics of two of the most common securities that mutual fund portfolios contain – equities and debt.

    Equities are shares of companies. Investing in equities is known to have a higher potential for growth. At the same time, they come with a higher risk as well.

    On the other hand, debt investments are considered safer comparatively. But their growth potential tends to be lesser.

    An important thing to understand here is that different equity and debt instruments have varying risk and return potential levels.

    Things to consider to maximise wealth creation

    Now that you understand the varying characteristics of equities and debt, take a look at three methods you can use to try and maximise your capital appreciation. 

    1. Choose a high-risk option

    As discussed above, high-risk options are known to have higher return potential as well. To make use of this, you may dedicate more space to securities like equities in your portfolio. This can ensure that you have the highest chance of growth.At the same time, remember that diversification is also important, and don’t invest in one security alone. Rather, try and make up to 65% to 70% of the investments in the portfolio in high-risk options if your risk tolerance allows.

    2. Target a sector that shows potential
    One way to ensure that your equity portfolio choices have the best chance of growth is by targeting a sector that is expected to perform well. Not all sectors perform similarly at all times. Different sectors will have different time periods where they tend to outperform other sectors.

    For instance, the hotel and tourism sectors showed bullish signs once COVID-19 restrictions were lifted worldwide. You could do your research to find out similar opportunities and invest in companies in the sector that shows the most potential.

    1. Try investing in the index
      If historical data is to be believed, index funds have always outperformed short-term fluctuations in the long term. The growth of Sensex and Nifty are examples of this. Both indices have grown more than 70% in the last five years as of November 2022. If you are an investor who is looking for not-so-aggressive options like the two above, you may try to invest in indices to try and maximise your chances for growth.

    You can invest in them through index mutual funds. They are mutual funds that track an index as is.

     Conclusion

    The above methods could help you gain maximum returns from mutual fund investments. But at the same time, it is important to ensure that you are not blindly following returns alone. Instead, the best approach is to figure out your risk tolerance and apply these above methods if your risk appetite allows for the same.

  • Your Present best Chances with the Business Without Investment

    Your Present best Chances with the Business Without Investment

    In the early stages of their businesses, many entrepreneurs confront the same challenge: how to earn a profit while avoiding the need to spend significant financial resources in their operations.

    In order to assist those who wish to start a business but have limited financial means in doing so, the following are five steps they may take to help them overcome the difficulties listed above.

    Try to maintain your job for as long as you possibly can if at all at all feasible

    To be an entrepreneur, some individuals feel that one must devote one’s whole time and attention to one’s own commercial operation. Others, though, are not convinced. A considerable deal of effort and many hours of hard work are required to achieve success in the real world. But if you are already employed, there is no need that you stop working right away (at least for the time being). Beginning with excitement because you have a better grasp of how the company will be received, as well as the demand for its products, and how the brand will change over time as you gain more information about the market, it is an exciting experience. For business without investment you need to consider the followings.

    During the second step, you should choose a specific area of study in which you are very interested

    Despite the fact that you may not have the required financial means, it is feasible to start your own company. The most important thing to remember is to devote the required time and attention to the task at hand. Choosing the sector in which you wish to work is an important step before beginning your job hunt. This is, in essence, the first stage in the procedure’s progression. In this instance, the question is not “What is the best business to make money in?” but rather “What is the most profitable industry to make money in?” The issue being explored is “What is the most lucrative sector to make money in?” The inquiry states that the question is “What sectors do I already have skills and expertise in, and how can I earn money in those businesses?” The inquiry further states that the question is “What sectors do I already have talents and experience in, and how can I make money in those businesses?”

    Fulfilling all of your responsibilities at your place of residence

    According to the PEGN website, it is possible to identify numerous instances of entrepreneurs who started their enterprises in a small room in their own home and eventually expanded. As a result of the reduction in overhead, it will not only become more feasible, but it will also become less costly due to the savings in lighting, water, power, and renting space that will be realised as a result of the drop in overhead. Create a website on a free or low-cost platform and use social media to market your product or service after you have determined your goals and products, and after you have determined your goals and products, after you have determined your products and services. Giving a first taste of the product to a small number of close friends may be a wonderful experience, especially if it allows you to judge how the product will be accepted by a larger audience.

    Using social media sites to reach out to customers (make sure you use the business account!) is a great way to build your brand and build relationships with your customers. When a consumer sees a basic list of accessible products and services selections, as well as when they get automatic responses during their initial contacts with the organization, customer acquisition is made easier.

    Implement, test, and re-implement your solution as many times as necessary

    Understanding what works and what doesn’t work during the first few months of operation can assist the organization in identifying areas where it may make changes to its current operating procedures. In order to determine the most lucrative road to profitability, you must first get input from customers. They will tell you whether or not your product works, what alternative items they would want you to manufacture, and what their most urgent requirements are. Following the receipt of this information, you will be better prepared to do more study and eventually choose the product or service that has the greatest likelihood of success in the marketplace. As a consequence, the creation of approaches and actions for providing items to customers as quickly and effectively as feasible would be required.

    The fifth step is to design plans for the company’s future growth and development

    Soon after your company has shown that it is capable of standing on its own two feet, you will realise that you have more time on your hands to think about long-term aims and strategies, and you will be able to put those plans into action. It is anticipated that the organisation will benefit from clarifying roles and responsibilities, as well as the elimination of day-to-day operations, which will free up resources to develop innovative ideas to attract new clients, launch more ambitious initiatives, and investigate additional job opportunities. Based on the fact that your firm is now successful, you may be in the position to allocate a portion of this revenue toward expansion initiatives, which will enable you to expand your product or service offerings into new market segments. Moreover, it is possible that you will attract the attention of an investor who is eager to assist financially to the development of your firm.

  • What are mutual funds, and how to invest in them?

    What are mutual funds, and how to invest in them?

    There are numerous ways of investing one’s capital, but none as famous as mutual fund investments in India. A mutual fund is a pooled investment instrument that collects money from various investors and invests it in securities such as equities, bonds, money market instruments, etc.

    Every person who invests in a mutual fund owns units of the fund. A mutual fund’s NAV (Net Asset Value) is the fund’s per-share market value. The NAV is the price at which a mutual fund’s shares are bought and sold. The NAV of a fund is derived by dividing the market value of securities of a scheme by the total number of units of the scheme on any particular dateIt is declared at the end of every trading day after the closure of markets.

    Types of mutual funds in India

    Mutual fund companies divide mutual funds based on structure and asset class. Here are the various kinds of mutual funds based on their structure.

    • Open-ended mutual funds: Open-ended mutual funds have no limits onwhenan investor can invest in the fund.
    • Close-ended mutual funds: Close-ended mutual funds allow investors to purchase units only during the New FundOffer (NFO) period. These units can be redeemed at a fixed date of maturity.
    • Interval funds: Interval funds get opened for the purchase/redemptionofunits at different intervals during the fund’s tenure. Hence, they have the features of both open-ended and close-ended funds.

    Based on their asset class, mutual funds can be divided into four types.

    • Equity funds: Equity mutual funds invest in stocks. These funds are risky but can provide high returns.
    • Debt funds: Debt mutual funds invest in debentures, fixed income assets, and government bonds. They are low-risk investments that may provide better returns than a savings account or fixed deposit.
    • Hybrid funds: Hybrid mutual funds invest  in a mix of asset classes. Hybrid funds balance risk and returns by maintaining a proportion of equity and debt investments.

    How to invest in mutual funds? 

    Follow these steps to invest in a mutual fund scheme:

    • Risk profiling: Assess your risk-taking ability. This involves identifying the kind of investment vehicle you wish to invest in, including its risks.
    • Asset allocation: As the next step, you must look to divide your capital into various asset classes. Asset allocation must be a mix of equity and debt instruments to balance the risks.
    • Identification of funds: After dividing your capital into assets, you must identify the funds belonging to each asset class in which you wish to invest your capital.
    • Consider  a mutual fund SIPcalculator: A mutual fund SIP(Systematic Investment Plan) calculator can help you estimate the size of the corpus that you can have via regular mutual fund investments.
    • Invest online or offline: Once you have gone through these steps, you can invest in the mutual fund scheme of your choice, either online or offline.

    To sum up

    A mutual fund scheme is a pooled investment strategy that helps you invest in various assets, including equity, debt, or a combination of both. The price of a unit of a mutual fund scheme, called its NAV, is decided at the end of a trading day. Before investing in a mutual fund scheme, you must assess your overall risk-taking ability, identify the fund you wish to invest in, and consult a mutual fund SIP calculator.

  • Which Mutual Fund Is Best For Beginners?

    Which Mutual Fund Is Best For Beginners?

    The COVID-19 pandemic forced young professionals to look at investment avenues for earning extra income. That’s because when stay-at-home orders became the norm in 2020, people learned the hard truth that the income from full-time employment is not enough. That’s when people started looking at investment options such as FDs or investment schemes that are known to allocate funds to the market. While schemes such as FDs are known for being a safe investment option. Market investments are known for coming with risks. But they are also known for fetching high returns for their investors. This is the reason people prefer signing up for investment plans that are known to direct their investments toward the market.

    One of the schemes that are known for investing in the market is mutual fund plans. Mutual fund plans can be defined as an investment tool that is known for pooling money from a group of investors to purchase different securities. Once enough money is collected into the fund, it is invested in various financial securities like money market instruments, stocks, and gold. When you opt to buy a unit in a mutual fund, you end up owning a small stake in all the investments that are considered a part of the fund. As these schemes are known for coming with numerous benefits, mutual funds are considered a prudent investment choice.

    How are mutual fund schemes known to work?

    To opt for a mutual fund scheme, you firstly need to select an AMC i.e., an asset management company. There, you will need to select the right variant of mutual fund scheme that caters to your distinct investment needs. After selecting the scheme after learning the fund’s objective, the money from the pooled fund is invested into various securities such as gold, bonds, stocks,and other money market instruments. A professional called a fund manager is responsible for the upkeep of each fund. The fund manager aims to earn optimum returns on the fund’s investments. Afterwards, the revenue generated by the fund is divided and distributed among the investors proportionately.

    Are there any actions that need to be taken to select the right mutual fund schemes?

    Considering the fact different types of mutual funds are available as an investment options, it is understandable that a new investor might be confused. But there are certain actions that you can take. Listed below are some of the actions that you can take. They are:

    • First, determine the investment objective:

    This is an action that you need to take before you sign up for a mutual fund scheme. You need to ascertain the main reason behind your choice for investing in a mutual fund scheme. For example, you want to increase your savings in the future, and, to do so, you may opt to invest in mutual fund plans for ten or more years so.

    • Research the market condition thoroughly:

    Consider this hypothetical scenario. You are considering opting for an equity fund. But you just can’t blindly sign up for the said variant of mutual fund scheme because the equity market is extremely volatile. So, it is prudent on your part to thoroughly study the market conditions regularly.

    • Look up the performance of a mutual fund scheme:

    It is better to choose a mutual fund scheme that offers the best returns to the investors regularly. So, it is very important to check the consistency offered by the scheme. It can be done by looking up on the internet and apart from looking up past performance, it is also important to check the ranking of the scheme.

    What are the different types of mutual funds that are available as investment options?

    Here are some of the variants of mutual funds that are available as investment options:

    • Equity funds:

    Equity funds are a variant of mutual funds that are known for allocating funds mostly to the stocks of various companies. As the name suggests, these funds are known for investing primarily in equities to generate capital appreciation. However, it is important to make note of one important fact. It is, you need to steel yourself against investment risks.

    • Debt funds:

    Also referred to asfixed-income funds, debt funds are known forgenerally investing in assets such as government securities and corporate bonds. The main objective of debt mutual funds is to offer reasonable revenue to investors. These mutual funds can be considered an ideal investment optionif your financial goalis to acquire a steady income over time.

    • Hybrid funds:

    Hybrid funds are a type of mutual funds that are known for coming with both debt and equity components in a specific ratio. These schemes are known for helping you to diversify your investments by allocating your funds to different asset classes such as equity and debt.

    What types of mutual fund schemes are suitable for beginners?

    If you are new to the world of investment, you should have an open mind about opting for any type of mutual fund scheme. That’s because to get the best results, you need to select mutual funds based on things like your investment objective and time horizon.