Oshkit - Please guide me on this. Suppose I inv...
Please guide me on this. Suppose I invest a lump sum amount in mutual funds for 1 year. And after completing 1 year I decide not to withdraw the mature amount. What will happen to it ? Will it stay invested along with the interest or will it stay invested without the interest or will the mature amount remain the same without staying invested ?
(Ps : investing through kuvera)
7 Replies
Yes, because of compound interest. Which all Growth MFs follow by, the only kind of MF you should be investing in too.
Mutual funds don't offer interest, there's no "maturity" -- it's not an FD. The value of a unit of a fund (NAV) fluctuates as per the assets it holds (could be equities, bonds, commodities, cash etc., depending on the type of scheme). Total value of your investment at any given time is number of units x the last declared NAV.
So I will own the assets as long as I don't sell them even though I have exceeded my 1 year of owning the assets !
And is it like the longer I own the assets the greater the returns will be after selling the assets ?
@Oshkit I recommend reading this, or from the first chapter if you'd like https://zerodha.com/varsity/chapter/introduction-to-mutual-funds/
Varsity by Zerodha
Introduction to Mutual Funds – Varsity by Zerodha
To build a retirement corpus, long-term investments in mutual funds is inevitable. Given the mutual funds plays in our financial welfare, it is justified to spend some time to learn about mutual funds.
It's best to understand in detail in whatever you'll be investing
Unknown User•3w ago
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No, it doesn't work that way. There's no fixed time period for which it has to stay invested -- you can buy and redeem any time you want. But you are not guaranteed any returns at any point in time. However, one hopes that, based on growth of equities in the past, over long periods, with proper financial planning, asset allocation and risk management, one can make better returns over inflation compared to low-risk investments like FD.