A mutual fund is an investment vehicle where money from many investors is pooled together and invested by professional fund managers into stocks, bonds, gold, or other securities.

In simple terms:
Many people put money → a fund manager invests it → profits/losses are shared.

How Mutual Funds Work

1. You invest money in a fund (SIP or lump sum).

2. The fund manager invests this pooled money in various assets.

3. Your investment value goes up or down based on market performance.

4. You own “units” of the mutual fund, similar to shares.

Types of Mutual Funds

1. Equity Funds

· Invest mainly in stocks

· Higher growth potential

· Higher risk

2. Debt Funds

· Invest in bonds, government securities, corporate debt

· Lower risk than equity

· Suitable for stability and regular income

3. Hybrid Funds

· Mix of equity + debt

· Balanced risk and return

4. Other Categories

· Index Funds (follow Nifty/Sensex)

· ELSS Funds → Tax-saving under 80C (Maximum upto Rs.1.5 lakhs)

· Liquid Funds → Very low risk, for short-term parking of money

✨ Benefits of Mutual Funds

· Professional management

· Diversification → reduces risk

· Easy to start (SIP starts from ₹1000/month)

· Highly liquid (withdraw anytime for most funds)

· Regulated by SEBI

· Tax-efficient options available