Rule No. 72: In how much time will the money in Mutual Funds double?

In the last episode of the Finance Ke Funde series, we learned that if you cannot track the market continuously, then mutual funds are a great option for you. Because a fund manager manages your investment. However, many investors have this question in their mind how to start investing in mutual funds, which platform is right for them, and which mutual fund should they invest in? In the second episode of this series, we tried to know the answers to these questions. Avdhesh Garg, Founder & CEO, of Confidence Investment, talked to us on all these issues.

How many types of Mutual Funds are there?

In response to this question, Avdhesh Garg said that there are mainly two types of mutual funds. One is Equity Mutual Fund and the other is Debt Mutual Fund. Both of these have different types of risks associated with them. And both work differently. If you want to get complete information about it, then you can watch this video completely here.

How much is the risk?

In Equity Mutual Fund, all your money is invested in the stock market. In which there is a risk of market fluctuations. Whereas in a Debt Mutual Fund, your money is invested on a loan, which has the risk of interest rate. In Debt Mutual Fund, there is a risk of your return decreasing due to an increase in interest rates, whereas returns are expected to increase due to a decrease in interest rates.

What is Rule No. 72?

Through this rule, you can know in how many years your money will double. For this, divide whatever return you are getting by 72. Garg explained through an example that "For example, suppose you are getting a return of 12% in a year, then you will do 12/72 i.e. money will double in 6 years. Along with this, keep in mind that the higher the Compound Annual Growth Rate i.e. CAGR, the sooner your money will double."

If you also want to invest in Mutual Funds, then you can get all the information about Mutual Funds by joining this series. Click to watch all the episodes of "Finance Ke Funde" series-