A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.
Is it difficult to withdraw my investment from mutual funds?
Are you worried about losing access to your money once you invest in a mutual fund? In fact, you’ll have complete freedom to withdraw your money whenever you need it. Many investors think their money is locked in as they may have to undergo a cumbersome redemption process. Withdrawing your money from a mutual fund can be as easy as withdrawing money from your bank. All you have to do is log in to your mutual fund account and click on the “Redeem” button.
You can also submit a request through your distributor or visit the mutual fund office to submit your ransom note. The money is credited to your registered bank account within 3-4 business days depending on the type of scheme you invested in regardless of whether you make the request online or via a physical application. In case of some overnight or liquid funds, you can also get your money the same day that some AMCs offer an instant redemption feature to their investors for investments of up to INR 50,000. Since these funds are meant to park surplus money for a few days or weeks, the instant redemption feature allows you to meet immediate money needs while your money can earn some returns. However, you should be aware of the exit charges applicable to refunds.