MUTUAL FUNDS

Mutual fund investing can be much simpler than investing in individual stocks, especially for beginners. Investors who decide to put their money in mutual funds will get services of the top notch mutual fund manager at just a small fraction of the cost of a personal investment advisor. The person managing the mutual fund will be an expert in the field you are investing in, which means you don't have to be.

What are Mutual Funds?

Mutual funds are a common pool of money in which investors put in their contribution. This amount is then invested in various securities according to the investment objective of the fund. These funds are managed by financial professionals responsible for investing the pooled in money.

Just as carpooling saves money for each member of the pool by reducing costs for everyone, mutual funds decrease transaction costs for everyone in the pool. However, the biggest advantage of mutual funds is having a professional manage your funds.

The minimum amount needed to invest in mutual funds is very low. You can start investing in SIP (Systematic Investment Plan) with an amount of ₹500 only. One of the advantages of mutual funds is that investors can start with a very low amount. Mutual funds are extremely helpful for beginners looking to increase their money.

Mutual Funds allow you to invest in a particular sector of the economy as there are many Mutual Funds that allow you to invest in only one sector.

For Example: ICICI Prudential Technology Funds

Why invest in mutual funds?

• Mutual funds allow you to pool your money with other investors and leave certain investment decisions to a portfolio manager. Portfolio managers determine where to invest the money in the fund, and when to buy and sell investments.

• Mutual funds are broadly available through banks, financial planning firms, investment firms, and trust companies. You can sell your fund units or shares at almost any time if you need to get access to your money. But you may get back less than you invested.

• A mutual fund holds a diversity of investments which can make it easier for investors to diversify than through ownership of individual stocks or bonds. Not all investments perform strongly at the same time. Holding a variety of investments may help neutralize the impact of poor performers while taking advantage of the earning potential of the rest.