Hi guys,
We are talking about mutual funds. Use your money to grow your money.
A mutual fund is a professionally managed investment plan that pools money from many investors to purchase securities.These investors may be retail or institutional in nature.It is a trust that collects money from a number of investors who share a common investment objective. Then, it invests the money in equities, bonds, money market instruments and/or other securities.
A Mutual Fund is one of the most viable investment options for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
The collective investment is distributed proportionately amongst the investors after deducting certain expenses by calculating a schemes Net asset value or NAV.
Investing is all about taking calculated risks and managing the same, not avoiding the risks altogether.
Benefit:-
- Diversification- Diversification involves the mixing of different types of investments within a portfolio and is used to manage risk.
- Economies of scale - the easiest way to understand economies of scale is of thinking of volume discount.
- Divisibility - you rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. This provides an additional advantage - liquidity.
- Liquidity - it is ability to get in and out with relative ease. Any time during market hours, mutual funds transact only once per day after the fund's Net asset value (NAV)calculated.
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