Mutual Funds

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What are Mutual Funds’ Investments?

This is a type of a professionally managed collective investment drive that raises money by selling shares or units to individual investors. The funds gotten are then used to purchase a variety of other investments. Sometimes the funds are called investment companies and are regulated by the security industry. In most cases, they can be bought and sold at the convenience of the investor.

How does Mutual Funds work?

Investors buy funds from a fund itself or a broker for the fund rather than the other investors at a price of funds per share net asset value including fees charged at purchase time. The funds are redeemable and upon selling, payments are made within seven days. Before buying funds, an investor should understand the prospects as they contain information about the mutual funds’ investment objectives, risks, performances and expenses.

Factors that determine the best time to invest in Mutual Funds

  • Risk factor determined by investment amount and duration.
  • Market positioning.
  • Return investments.
  • Tax saving under section 80c.
  • The long-term or short term goal.

Factors to consider when choosing a Mutual Funds

  • History of the company or fund.
  • Management of the fund.
  • The focus of the funds.
  • Fund performance.
  • Fees allocated and risks.

Types of Mutual Funds

  • Money market
  • Fixed income
  • Growth or equity
  • Balanced
  • Global
  • Specialty
  • Index

Benefits of Mutual Funds Investments

  • Affordable means of professional management because of shared costs.
  • The easy and seamless way to diversify investments.
  • Its liquidity allows easy selling and buying of mutual units.
  • Built-in diversification.

Who should purchase Mutual Funds Investments?

Mutual funds are flexible with the availability of multiple categories to suit different needs as per the risk profiles of the investors. It’s not limited to a particular group of people, students, stay at home spouses as well as those in the workforce can all collectively invest in mutual funds. Also, there is no best time to invest in mutual funds but it is doing it when:

  • Markets have hit rock bottom.
  • Bond yields are highest.
  • High developments in the realty sector.

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