Mutual funds are mainly of three types:
1 – Equity Funds – Invest in stocks, ideal for long-term growth.
2 – Debt Funds – Invest in bonds and fixed-income assets, suitable for stable returns.
3 – Hybrid Funds – Mix of equity and debt, balancing risk and return.
They can also be:
Open-ended (buy/sell anytime) or Close-ended (fixed period),
Tax-saving (like ELSS) with benefits under Section 80C.
1 – SIP (Systematic Investment Plan): You invest a fixed amount regularly (e.g., monthly). It builds discipline, averages out market volatility (Rupee Cost Averaging), and is ideal for salaried individuals.
2 – Lump-sum Investment: You invest a large amount at once. Best when you have surplus funds and the market is favourable.
Key Difference:
SIP is gradual and suits regular income; Lumpsum is one-time and suits those with available capital.
