Mutual Funds
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective.
The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds).
Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).
Imagine you and your friends decide to host a party by pooling your money to create a fantastic snack table. Each person contributes some cash, just like investors do in a mutual fund. One friend takes charge as the “Snack Manager,” buying a variety of treats to ensure there’s something for everyone, and you all enjoy the delicious spread, everyone benefits from the popular snacks. It’s a fun way to enjoy a variety of treats without the stress of bringing your own!
Mutual funds work similarly like a group snack platter where investors pool their money to create a larger fund. A professional fund manager selects a mix of investments—like stocks and bonds—based on the fund’s goals. This diversification spreads risk and aims for better returns. Investors then earn returns based on the fund’s performance, enjoying the benefits of a balanced investment without the hassle of managing each asset individually.
The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor the investments.
Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.
By owning "shares"(known as "units") in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you.
Buying a mutual fund is easy! The minimum investment is also very small. As little as Rs. 500 can be invested on a monthly basis. Just contact us to know more.
