How Money Grows In A Mutual Fund
How Does My Money Grow In A Mutual Fund?
Savings banks and fixed deposits work on the basis of interest - that’s how your money grows. But how do mutual funds work? Here’s the answer.
When you buy gold or property, it appreciates/depreciates over time. The difference between purchase price/sale price is your capital gain. This is how MFs work - based on capital gains.
MFs, Units & Returns
When you invest in an MF, you buy “units” at today’s price - the NAV or Net Asset Value.
The price of the unit can go up or down when you sell it later. That is your capital gain.
MFs: The Benefits
The nice thing about MFs is that you can buy small quantities, as per your budget.
But, just like gold or property, you need to hold on to them for a while to see real gains/returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.