Why Investing In Mutual Funds Is A Good Idea-tom365.com

Stocks-Mutual-Funds Being new in the world of investment, confusion may follow. With more and more stock and bond investment opportunities, it has become more complicated to settle on which stocks or bonds to purchase. As a result, most people make serious investment mistakes and suffer later. In the agent driven market like ours, people believe more on a hired agents recommendation rather than putting efforts to increase knowledge in the niche. Agents, on the other hand, make recommendations considering their higher commission options without acknowledging the client financial goals and future needs. Here, the idea of investing through mutual funds comes as a good alternative. It is important to understand why investing in mutual funds is a good idea and how one can do that. What is a Mutual Fund? A mutual fund is an entity that offers small investors an easy way to participate in the securities market without having to buy and sell stocks, bonds and other securities directly. The pooled money, managed by a fund manager with high skills and experience in securities market, is then invested in a range of money- market instruments. Every investor is entitled to any profit or loss incurred by the investments made with the fund money. Advantages of Mutual Fund Investments Diversification of Risk: A mutual fund invests across a wide range of sectors and thus limits the investment risk. Even if some of the sectors do not yield expected returns, others may get up good returns. Benefit with Professional Management: Skilled investment managers are hired to manage the pooled money and carry out cost effective trades. With immediate access to critical market information, they try to dispense good returns to investors. Less Initial Cost: Mutual funds are valuable to small investors as they let you participate in a diversified portfolio starting with very nominal amount of Rs.5000 or less, while it also allows to continuously increase your shares by contributing smaller amounts in the mutual fund. With less amount involved, the relative risks are small as well. Asset Liquidity: Mutual fund schemes are highly liquid, meaning you can quickly sell and get your money back at net asset value (NAV) related prices. You can get your money in hand in a matter of a few days from the mutual fund itself. Convenient (No Self Book-keeping): The fund manager takes care of the record keeping, investment analysis and other tasks while providing transaction confirmations and tax implications to investors, relieving you from the stress of own record keeping of purchases, sales, interested, dividends etc. About the Author: 相关的主题文章: