Mutual Funds are offer a safer investment option to beginners in the stock markets. They are a very good tool for wealth creation with equity exposure to the investment.
Mutual Funds are managed by professionnal fund managers. The fund managers are hired by Asset Management Companies (AMC).
AMCs charge nominal charges in the form of Entry Load from the investors. Entry Load is what you pay as investor for investing in Mutual Funds. Some companies also charge Exit Load also when you redeem your investment back. Entry Load and Exit Load is charged around 1% of the investment amount or redemption amount respectively.
Systematic Investment Plan or SIP is a method of investing in Mutual Funds regularly and systematically. SIP is better method of investing in Mutual Funds. As per current rules, SIP are free of Entry Load. However, you may be charged with Exit Load if you redeem your investment before one year of starting SIP or any other specified time period defined by the AMC.