WHAT ARE MUTUAL FUNDS ??
Mutual Funds are financial intermediary that allows a group of investors to pool their money.
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).
ADVANTAGES OF MUTAL FUNDS ?
1. PROFESSIONAL MANAGEMENT
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.
2. DIVERSIFICATION
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.
3. ECONOMIES OF SCALE
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.
4. SIMPLICITY
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.