New to mutual fund investment? Start your journey with this fund…Beginners guide

Once we start earning, the first advice we get is to start saving, but at the initial stage, one of the most prominent question is where to invest, among the many options available one of the best options is to invest in a mutual fund.

But there are many types of mutual funds available in the market, in which mutual fund should I invest ???

At the very initial level of investment, one of the best options available for you is to invest in an ” Index fund”. Now the next question that will come to your mind is what is an “Index Fund”.

What is an Index Fund?

An index fund is a type of mutual fund that invests in the shares of those companies that are present in the underlying index in order to replicate or imitate that stock market index like NIFTY or Sensex. The objective of this fund is to provide comparable returns similar to the index they are replicating.

How it works and what is the risk?

In order to understand it better, let’s take an example.

If Mr. A is investing in the fund that is replicating Nifty. Then that fund will invest in those 50 companies that are underlying NIFTY and in the same proportion, as they are present in that index.

These funds are comparatively less risky and less volatile as they are replicating the index and as said they will also replicate the same returns as provided by the Index. However, in many cases, it is observed that the return of the index fund has exceeded the returns of the index they are replicating depending on the fund manager.

One important piece of advice is to always invest for the long term in mutual funds to see their growth and fetch the results

Note:- Investments are subject to market risk, apply your discretion and conduct proper research before investing.