What is a 'Mutual Fund'
A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets. Mutual funds are operated by professional money managers, who allocate the fund's investments and attempt to produce capital gains and/or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.
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Can Mutual Funds help create wealth?
Business and commerce allows us to create wealth by investing our money with those who are on the path to creating wealth. We can be investors in businesses of entrepreneurs, by investing in stocks of various companies. As the entrepreneurs and the managers run their businesses efficiently and profitably, the shareholders get the benefits. In this regard, Mutual Funds are a great way to build wealth.
But how do we know which stocks to buy, and when?
That is where taking professional help counts. They also take the advantage of a large corpus to explore more opportunities simultaneously. Like a balanced diet – we all need proteins, vitamins, carbohydrates, etc. Eating only one type results in some nutrient deficiency. Similarly, in a diversified equity fund you’re exposed to different segments of the economy, and also protected from the potential downside.
Invest in a professionally managed, diversified equity fund and stay invested for long period to create wealth for yourself and your next generation.
Why invest through Mutual Funds & not directly in stocks or bonds?
Yes, it is “through” Mutual Funds and not “in” Mutual Funds. What is the difference?
You may indulge in
buying and selling stocks and bonds once in a while, but taking help from Mutual Funds to manage your investments may be a much better idea.
When you invest through Mutual Funds, you invest in stocks, bonds or other investments indirectly with the help of professional managers. Instead of doing the tasks yourself, you pay a small fee and avail the services of a fund management company. These services include not just research, selection and buying-selling of various investments, for which a fund manager is well qualified, but also the accounting and administrative activities related to the task of investing, which many may not like to do themselves.