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Heard the term Mutual Funds but not familiar with what they actually are? Mutual funds have emerged to be the most popular investment form for any and every type of investor. Due to the simplicity offered, the mutual funds market has witnessed a multi-fold increase in financial terms. Suitable for beginners as well as proficient investors, they are surely a powerful and effective mechanism for all.
Here is a brief guide to understanding the concept of mutual funds as your best investment plan.
What are Mutual Funds?
A mutual fund is an easy investment security option that facilitates the investors to pool in their hard earned money together into a professionally managed and controlled investment. By investing in mutual funds, an investor can indirectly invest in stocks, bonds or cash individually or a combination of all these assets. The underlying security types are generally known as holdings that combine together to form one mutual fund and is generally known as a portfolio.
In simple terms, mutual funds are investment baskets that hold different types of bonds, stocks or a combination of both bonds and stocks. While investing in this investment basket, the investment does not hold the holdings directly rather they own the representation of the holdings. Due to the diversity, mutual funds offer, they are also referred to as diversified investments. Mutual funds assure reduced risk as compared to other individual stocks or bonds.
Why Mutual Funds?
Following four words, best describes the advantages offered by Mutual Funds:
Types of Mutual Funds
Mutual Funds can be categorised and sub-categorised as below:
Based on speciality
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Disclaimer :- Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance of the schemes is neither an indicator nor a guarantee of future performance.