Open ended fund vs Close ended fund

Open ended fund vs Close ended fund :Which one is better?In which fund to invest your hard earned money? 

New investors when start gaining financial knowledge,they want to invest in mutual funds as the return on FD's are not high.Most of the investors know about the type of mutual fund they are investing in but very few of them know whether it is open ended mutual fund or close ended mutual fund.Before investing in mutual fund one must know the difference between open ended and close ended mutual fund and then decide in which one they should invest.Both of these funds pools money from the investors and invest acording to objective of fund.

OPEN ENDED FUNDS :

The open ended funds are available to investors all time they can enter and exit anytime they want.They don't have fixed maturity period and are usually not listed on stock exchange.It's valuation is totally dependent on investors faith.In open ended fund there is no limit how many shares are to be issued.Prices of the funds are adjusted daily according to NAV of the fund.The NAV reflects the market valuation of the asset minus the liability of the scheme.If the scheme perform well then the NAV goes up and if the scheme perform poor then the NAV decreases.

CLOSE ENDED FUNDS :

Close ended funds are open for specific period of time investors have to invest money or withdraw money within that specific period after that they can't increase or decrease their investment.These funds are then traded on stock market and thus the investors can get out of the fund or decrease or increase it's investment can buy or sell their share in stock market.

DIFFERENCE BETWEEN OPEN END AND CLOSE END

1.  Open ended funds are more popular among investors as it give them opportunity to enter and exit any time they want.Whereas Close ended funds give only a specific period of time for enter and exit ,you are locked in for specific period and if you want to exit the position then you have to dispose of it through stock market.
2. The price of open ended fund is fixed once a day whereas the price of close ended fund just like any other stock changes every minute depending on supply and demand.
3. The open ended fund gives you option of SIP You can do SIP in fund of your choice,whereas in case of close ended fund you have to give lump sum as there is no option of SIP
4. The corpus of open ended fund will keep on varying since there is buying and selling whereas in case of close ended fund the corpus remains same

WHICH ONE TO CHOOSE :

It's very difficult to say which one to choose it purely depends upon your aim for investing and how much amount you can invest.As in case of close ended fund you have to give lump sum so if you can,t invest lump sum then open ended fund is a great choice for you.If you have little or no knowledge of stock market then open ended fund is a great choice whereas if you can invest the lump sum and can invest for long term then close ended fund is a great choice for you.