In India , you can earn a lot of money by investing into different goods , you can start your own retail business , wholesale business or apply for distributorship of any product , can do trading of some trending product or can place your own manufacturing unit . But sometimes, your business might not give you that much returns which you expect from your business , you have to also plan some other sources to earn also . The other way you should plan to earn should be a passive source of income to earn so that you should not get engaged in your other source , other than leaving your main business , you have to focus on both and the second source should be a passive source of income and it should give some targeted returns . When you target your returns to some value then you also have to bear some risk because in this world if you invest in any source of income , you must have to bear some amount of risk in that . A good source of income for you could be mutual funds or investing in equity or debt directly through share market . Both sources of investment and income have some pros and cons which need to be discussed to decide which would be the prominent source for you to invest your hard earned money for some effective returns .
In this post , we shall be discussing how you can invest your money in mutual funds and earn good passive income from it , also how much risk is involved in this investment and when compared to a direct investment in equity which would yield you more returns compared to share market direct investment .
Mutual Funds : Basics to Know
In share market , you have endless tools to invest and receive returns . Each tool yields you something which sometimes is much much more than your offline business . In the Indian markets , share market investments are also considered as a direct business platform and mostly people do not consider it as a source of passive income but their full time job is investing in the stock marketing and getting some returns out of it .
It is important that you consider each and every tool of share market to earn , some basic tools in share market for earning include , equity investment , debt investment , corporate bonds , mutual funds , SIP (Systematic investment plans ) and dividend giving shares etc . In the share market , you can earn as like you invest in any offline business you earn , the basic difference comes that you transact in money and money market instruments to earn some profit other than buying and selling some commodity in actual.
In mutual funds , you are just investing in an expert advice and getting somewhat minimum returns than offered by any other investment ,. For instance , if you invest in an FD in any bank in India , then you might get a return of minimum of 5% whereas in any other investment you might get a return of about 8 -9 % but if you compare it with mutual funds then you will definitely get returns of minimum 11% in a mutual fund in a year which can also go up-to 35% or more depending on the risk appetite of the mutual fund .
Mutual funds vs Equity Direct Investment
In mutual funds , you are investing in a fund which is managed by fund manager which means that a fund manager is managing a bucket in which he is buying some stocks and selling them at profit to yield to some returns to the investor . In this case , you are investing in advice of the fund manager and he will be managing your funds for the next year and would yield you some returns which shall be much more than the FD interest or any other investment .
In direct equity investment , you shall be buying your own stocks based on your own analytical skills and your taste and preferences , but you should be knowing much more about share market investment to earn from it , because if you have no knowledge of share market then you shall end up your investment into losses . So compared to equity direct investment in stock market , you can go through mutual funds to earn some good money .
Cost vs Risk : Mutual Funds
In mutual funds , you can start your investment in as low as 1000 rs or you can start your own SIP , where monthly few amounts would be invested in mutual funds and your returns would be added in each month . For instance , you are a new investor and you invest in a mutual fund then in an year if you invest Rs 200000 then your total maturity value would be 222000 , which means on an annual rate of 11% minimum , you would be getting Rs 22000 ,for year where as compared to a bank FD then you would be getting a return of Rs 14000 at rate of 7% maximum .
Talking about Risk , in a bank FD the principal you invest is safer and your capital would not be charge to any risk or penalty of premature withdrawal . This means in an investment like Fixed deposit , your principal amount would always be safer . Where in mutual funds , your investment in principal might either get depreciated or might appreciate with returns . There might be both situations which can happen .
So, all in all , you can invest in mutual funds where your risk is managed by the fund manager and depending on your risk appetite you can also bifurcate your funds in both Fixed deposit and Mutual funds .
Hope , you find this post informative and interesting . If you want to invest in mutual funds you can definitely go for an amazing app Groww app availaible on playstore , where you investment is 100 percent safe and you don’t have to reach out to bank fund managers to check your mutual funds daily, you can just login in the groww app and can check your mutual fund investment returns daily .