Mutual funds are an investment tool that pools the funds of different investors to make into a combined investment product. This fund is then used for investing in different assets so as to reach its investment goals. There are different types of mutual funds available in the market.
Let's start with a basic understanding of mutual funds. A mutual fund is a type of investment instrument that invests in stocks, money market funds, bonds, and other similar assets. Several investors contribute to the creation of a pool of money, which is then professionally managed and invested in numerous funds.
With the market throwing up new investment opportunities every day, many people tend to get confused regarding whether to invest in mutual funds or fixed deposits for better returns. Before choosing any of them, you need to carefully analyze risks and returns involved in the plan.
Short for Systematic Investment plan, SIPs have gained immense popularity in the last few years, becoming one of the top investment choices in India. The performance and benefits of this plan have attracted the attention of many investors.
Many investors are looking to get high returns in the shortest possible time without losing the principal amount. However, there are no plans where the risk is low and returns are high. The higher the risk, the better are the returns. However, many people believe that you need to have a big amount to get started in the field of investments. This is certainly not true.
In today’s world, it is important to invest your money smartly. In order to have a backup plan for the uncertain future, it is good if you look beyond the regular options. Mutual funds present a viable option beyond the conventional investment avenues. However, there are several myths associated with it in the financial market.
Mutual funds are an easy, comprehensive and flexible way of investing and creating a diverse investment portfolio. However, depending upon different investor appetites regarding the risks involved, there are different types of mutual funds in the market.