There are a variety of plans and options to choose for investing in mutual funds and this include
- Direct type of plan: Here the investor can directly deposit with any fund house where no external helpers are involved and thereby save intermediate unnecessary charges. Their pre-fixed NAV charges are a little higher in value as they offer lower initial expenses.
- Normal or Regular Type of plan: For registering and depositing with such plans, you need to initially invest through the respective external agent and then make use of their services. Their NAV is much lower compare to direct type.
- Growth kind of option: This particular type appreciates capitals without paying the dividends to its unit-holders but by constantly investing this income into the prevailing scheme and reflecting out the higher value in the NAV of the units under this option. Further, investors can enjoy these benefits through the process of redeeming them.
- Payout Options in the form of dividends: This option promotes the payment of dividends to its respective unit-holders. Accordingly, there is a chance of falling NAV value which is fully dependent on the extent of the dividend paid out.
- Re-investment Option on the dividends: There exists some kind of dividends that add-on units under options. Such dividends need to be invested back into the same scheme at tallied at the ex-dividend NAV. The advantage of this practice is that each investor receives an extra bunch of units on their investments in lieu of the dividends.
Benefits offered by mutual fund
- Small entry investors can really look forward to mutual funds for the need of effectively and professionally handling their money.
- It gives the natural advantage of enjoying the economies of scale and also the access to different level markets.
- It provides the entry to a pool of companies and sectors shares and thereby taking our portfolio to acquire those assets, which are otherwise expensive.
- Moreover, it offers liquidity and flexibility by providing diversity in its schemes.
- Apart from all this, it offers the advantage of a convenient, transparent and above all a well-regulated system.
Usually, people do experience a factor of fear while deciding on making investments. This is mainly due to the lack of knowledge about the particular investment scheme opportunities and the doubts regarding the financial know-how. Further, some financial markets exhibit abrupt behavior that may act as a barrier for many entry investors.However, the rise of mutual funds with its plethora of schemes structures have comfort almost all its users and has gained acceptance all over the world and now, it is a fact that the benefits offered by them clearly outweighs its shortcomings.