In a world where investing in the financial market is a part of our retirement planning, child’s education or marriage, planning our own house or vacations, buying a car and healthcare balances; the Mutual fund is a simple, tax efficient and effective tool to invest for these goals.
With an objective to make the investors aware of mutual funds, an attempt has been made to provide information on the same. It will help investors understand how to invest money in India and how to make more money with the help of mutual funds.
What is Mutual Fund?
A mutual fund is a mechanism for pooling money by issuing units to the investors and investing funds in securities like stocks, bonds, short-term money market instruments and commodities such as precious metals. The risks in funds are well diversified to offset potential losses since investments are spread across a broad cross-section of industries and sectors.
If today as an investor you do not have the funds to buy shares of five different companies together, or you do not have the expertise to invest directly in stocks then mutual funds do that for you.
How to Invest Money? Which Fund to Choose?
Do not blindly rely on the advice of a relative or a friend on randomly picking mutual funds. You should opt for funds that have performed consistently well over the long-term, instead of the season’s chart busters. Some people select mutual fund only by their rankings. But it is essential to know that if one could choose funds just by rankings then there wouldn’t be a need of an advisor.
Identify the following things before investing in any fund. Based on the condition you can decide the best investment options in India.
• Investment objective,i.e.long-term capital gains for retirement or a short-term income for general expenses
• Time horizon of the investment
• How much risk you can afford to bear
• Money/Amount you can invest regularly
There are three types of mutual funds namely: Equity Funds, Debt Funds and Hybrid Funds. All cater to different needs of different people. One needs to understand that each mutual fund has different risk and reward profiles.
A mutual fund is one of the best assets to grow wealth. By staying invested in mutual funds, you are sure to earn reasonable returns in the long run.
Watch Bwealthy YouTube channel and get help on mutual fund related queries. Find out how to become wealthy by choosing the right investment option. Watch the videos and learn how to select the right mutual fund as an investment option. Check out smart investment strategies and get yourself started on the right path to becoming wealthy.