Mutual Fund
Investment sahi…future sahi
What is a Mutual Fund?
A mutual fund service is a financial intermediary that allows a group of investors with a similar investment objective to combine their money and invest. There is a fund manager in every mutual fund that is responsible for taking the pooled money and investing it into specific securities. They are very easy to invest in, but you need to have some support that Imperial Money can offer when you are getting started.
How does a mutual fund work?
A mutual fund is nothing but a collection of bonds, stocks, and other such securities owned by a group of investors and managed by a professional investment company. It is difficult for an individual investor to have a diversified portfolio, but mutual funds simultaneously help investors come together and invest in equity and debt securities. Investors simply invest their money in mutual funds and become the unit holder of corresponding units. The mutual funds invest this money in different securities to earn dividends or interest which is then distributed to the unitholders. The unitholders can get capital gains if the fund makes money by selling stocks, and so on.
Advantages of Mutual Funds
1. Professional Management
The main advantage of a mutual funds service provider is to manage your money professionally. You do not have to spend time managing your individual portfolio. You do not even need great insights into the market. You can always bank upon your mutual fund manager to manage the portfolio and monitor all your investments at negligible expense.
2. Diversification
Shares, known as units in mutual funds, one can own specialties instead of individual stocks or bonds, therefore the risk are uniformly spread out. Because of such diversification, your loss at certain places can be balanced out with huge profits at other places. Large mutual funds have hundreds of different stocks in various industries, so it really expands the portfolio of an individual, which may not be possible in singularity.
3. Economies of Scale
As a group of investors, a mutual fund buys and sells large amounts of securities at a time, and the transaction costs are really less, too, compared to what one pays as an individual. The cost of acquisition of any asset is usually high, be it real estate or gold buying, but in mutual funds services, it is mostly low.
4. Liquidity
Like individual stocks, you can sell your units at any time in a mutual fund. Depending on the type of mutual funds – 1 day (liquid funds) to 4 days (equity) – investors can easily redeem their investments. The liquidity of mutual funds gives it a great layer of benefit and makes a good investing experience.
5. Simplicity
The minimum investment amount in mutual funds is really less when something as less as Rs. 500 can be invested monthly for greater returns in the future. Investing in mutual funds is also very flexible and user-friendly, as you can choose for how long you want to invest in any specialty, keeping your goals in mind. Simplicity is the key here as it is easy to invest, flexible, and ready money for long-term goals.