What are the basics of mutual funds?
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The basics of mutual funds in India are very easy to understand. You pay a mutual fund company a certain amount of money, either in the form of regular payments (known as the systematic investment plan or SIP) or one lumpsum amount. The mutual fund company then creates a pool (of your investments and those of others) and uses it to buy certain stocks and bonds. The mutual fund company then pays you dividends based on the performance of the stocks and bonds.