A mutual fund's value is the measure of its net asset value: the overall value of a fund's assets minus its liabilities, divided into the outstanding units. It gets accounted for daily and represents the current market value of its underpinning assets.

There are a number of costs generally associated with investing in mutual funds: expense ratio, which is the management fee charged yearly; entry load, which is charged when buying the fund; and exit load, charged when redeeming from the fund. Some funds will not have entry and/or exit loads levied upon them, but all have the expense ratio.

Mutual funds are subject to market risk. There is no guarantee on returns in entirety. However, different types of funds carry varying levels of risks-for example, equity funds carry more risks than debt funds. Diversification and professional management reduce the risks to an extent.

It always depends on your investment objectives, risk tolerance, time horizon, and financial situation. Before making any investment decision, it will be very important to consider the previous performance of the fund, fees that apply to that fund, and the record of the fund manager.

Yes, a Systematic Investment Plan allows the investor to invest a fixed amount periodically, say monthly, in a mutual fund scheme. SIP helps an investor discipline his or her investments, average out the cost of units, and create wealth in due course of time.

Mutual funds effectively work toward the accomplishment of long-term financial objectives such as retirement, children's education, or buying a house. In this respect, investment in equity or hybrid funds over an extended period of time may yield benefits through the power of compounding and possible capital appreciation.

Yes, mutual funds can be utilized for short-term needs as well because the investment would be made in liquid funds, money market funds, or short-term debt funds. These funds offer higher returns than traditional savings accounts but with relatively low risk.

They offer instant diversification because they pool investments across a large array of assets. Through the processes of diversification, the overall risk in your portfolio goes down since performances of different assets balance out each other.

Yes, some mutual funds-ELSS-offer tax benefits under Sec 80C of the Income Tax Act. All ELSS funds have a three-year lock-in. Thus, they provide a twin set of benefits: tax saving along with probable capital growth.

Yes, mutual funds can be utilized for regular income generation, either through an investment in Income Funds or Dividend-paying Funds, or through a Systematic Withdrawal Plan. In this manner, you could avail regular payouts while keeping your capital invested.