If you want to invest directly, you will have to visit the website of the mutual fund or its authorized branches with relevant documents. The advantage of investing in a direct plan is that you save on the commission and the money invested would add sizeable returns over a long period. The biggest drawback of this method is that you will have to complete the formalities, do the research, monitor your investment… all by yourself.
Types Of Mutual Funds –
The Securities and Exchange Board of India has categorized mutual fund in under four broad
categories:
Equity Mutual Funds
Debt Mutual Funds
Hybrid Mutual Funds
Solution-Oriented Mutual Funds
Equity Mutual Fund Scheme:
These schemes invest directly in stocks. These schemes can give superior returns but can be risky in the short-term as their fortunes depend on how the stock market performs. Investors should look for a longer investment horizon of at least five to 10 years to invest in these schemes. There are 10 different types of equity schemes.
Debt Mutual Fund Schemes:
These schemes invest in debt securities. Investors should opt for debt schemes to achieve their short-term goals that are below five years. These schemes are safer than equity schemes and provide modest returns. There are 16 sub-categories under the debt mutual fund category.
Hybrid Mutual Fund Schemes:
These schemes invest in a mix of equity and debt, and an investor must pick a scheme based on his risk appetite. Based on their allocation and investing style, hybrid schemes are categorized into six types.
Solution-Oriented Schemes:
These schemes are devised for particular solutions or goals like retirement and child’s education. These schemes have a mandatory lock-in period of five years.
