If you are interested in the stock market and investing, it is safe to invest in mutual funds while you learn the market. There are many benefits of investing in a mutual fund but, it is not wise to invest blindly.
Mutual Funds भनेको लगानीकर्ताहरूबाट पैसा सङ्कलन गरेर विभिन्न stocks , bonds, securities र नाफामुलक क्षेत्रमा लगानी गर्ने एउटा संस्था हो ।
Mutual funds हरु व्यावसायिक रुपमा profession managers / प्रबन्धकहरूद्वारा व्यवस्थित गरिएका हुन्छन्, जसले कोषको उद्देश्य र रणनीतिमा आधारित लगानी निर्णयहरू गर्छन्। लगानीकर्ताहरूले Mutual funds को सेयरहरू खरीद गर्छन्, र तिनीहरूको प्रतिफल कोषको कार्यसम्पादनमा आधारित हुन्छ। Mutual funds हरूले विविधीकरण, तरलता, र व्यावसायिक व्यवस्थापन प्रदान गर्दछ, जसले लगानीकर्ताहरूलाई व्यक्तिगत धितोहरूमा प्रत्यक्ष लगानीको तुलनामा कम जोखिममा प्रदान गर्छ र राम्रो लगानीको platform बनेको छ।
So, in this article you will learn about the basics of mutual funds; what mutual funds are, their types, and benefits.
What are Mutual Funds?
A mutual fund is an investment option where funds are collected from several different interested investors to diversify the portfolio. Mutual Funds were introduced in Nepal in the year 1993.
There is a team of experienced investors who will make the investment decisions on behalf of the people whose money is being used.
It is beneficial because it diversifies your portfolio. This means that your risk is also diversified and you won’t have to worry if one company does not do well.
What are the different types of mutual funds?
Mutual Funds in Nepal can be classified into two categories: Open-ended mutual funds and Close-ended mutual funds.
Open Ended Mutual Fund
There are currently 7 open-ended mutual funds in Nepal. Open-ended Mutual Funds allow the investors to buy and sell units of the fund directly from the company funds at any time. Unlike the Nepal Share market, securities can be bought and sold only during trading hours. There is no limit to the number of shares to be brought and sold in an open-ended Mutual Fund. An open-ended mutual fund allows you to make continuous investments.
For example: regular SIP investment is done in the open-ended mutual fund schemes.
Closed- Ended Mutual Fund
There are currently 33 closed-ended mutual funds in Nepal. It is called close-ended because capital cannot flow as freely as in the open-ended mutual fund. In a close-ended mutual fund, your investment is frozen for a while. This provides the investors with a stable asset to work with.
You cannot redeem it whenever you want and will have to wait for maturity. This is why you need to plan strategically if the investment you are going to make is what you want and if it is worth it or not.
For example: Real estate funds, commodity funds, and bond funds. NIBL Samriddhi Fund – I, NIBL Pragati Fund, and Laxmi Equity Fund are some of the closed-end mutual funds in Nepal.
What are the benefits of investing in mutual funds?
Portfolio Diversification
It helps you diversify your portfolio. Imagine this, if you were to buy stocks of a good company, it would cost you a lot and you would not have enough to invest in other good options.
Mutual funds take away this problem. With the money pooled from different people and investors, you will have a diversified portfolio.
Lower risk
If you invest in mutual funds, it also decreases your risk. Since you will have a diversified portfolio, your risk is also diversified. This means that if one company does not do well, you won’t have to worry much because the investors have invested in other stocks too.
Tax Benefits
According to the Income Tax Act, of 2058, the income that you earn from your investment in mutual funds is exempted from tax.
Safe investment option
If you are new to investing and have a very limited idea about the stock market, you should opt for mutual funds. This is because a team of professional investors looks over the investment options.
They keep track of the market and make strategic decisions to make sound investments. This is why it is a safe option when it comes to investment.
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FAQs
What are mutual funds in Nepal?
A mutual fund is an investment option where the investment of several different investors is pooled together so that they are invested by professional investors.
Which mutual fund is best in Nepal?
As of 2024, Himalayan 80-20, NIC Asian Dynamic Debt Fund, and Nabil Flexi Cap fund are the leading mutual funds in Nepal.
Can investing in a mutual fund get you tax benefits?
Yes, according to the Income Act, of 2056, states that your income from investing in mutual funds is exempted from being taxed.
When were mutual funds introduced in Nepal?
Mutual funds were introduced in Nepal in the year 1993.
Which is the first open-ended mutual fund in Nepal?
The first open-ended mutual fund in Nepal was the NIBL Sahabhagita Fund.
What are the two types of mutual funds?
The two types of mutual funds are Open-ended Mutual Funds and Close-Ended Mutual Funds.
Conclusion
Mutual funds have been used in Nepal as an investing tool since 1993. Today several institutions offer different schemes for mutual funds.
It is a safe option when it comes to investment so, if you want to invest and lack proper knowledge about the market or if you are simply looking for a low-risk investment plan, the mutual fund is your way to go.