About Mutual Fund
People invest in shares of companies are expected to provide investors with higher level of returns when compared to investments in fixed deposits, mainly due to the fact that any investment in shares attracts a higher level of risk. Especially, given the current volatile market conditions, a small time retail investor in equity shares stands the risk of losing his entire capital as the fluctuations in price can significantly erode his returns. But this risk can be minimized by investments in equity shares of a number of companies, such that, the probability of all companies losing shares value on a single day is very low, However, a small time investor will not have the financial ability to invest in equity shares of so many companies at the same time. Mutual Funds are investment vehicles that address this problem, where investment from many small investors are pooled together and invested into equity shares of many companies, thereby reducing the risk of equity price fluctuations to a large extent. The second advantage of mutual funds is also the fact that the fund is managed by professional managers who make informed investment decisions, which otherwise, small investors would not be in a position to make.
Another key advantage of a mutual fund is that the investments are very liquid, i.e, the investments can be encashed at short notice without losing much. The returns which mutual funds have offered in the recent past have been close to a year on year 40% on average and no other investment options, including real estate, has managed to match that
