Happy Family Learning about Mutual Fund Investments

What is Mutual Fund? - Mutual Fund Basics

  • Basics of Mutual Fund
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Basic of Mutual Fund

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

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  • Benefits of Investment
  • Mutual Funds as an investment vehicle

Benefits of Investment

Diversification - Spreads risk across numerous financial investments. Asset allocation - Allows for a selection of an optimised mix of assets.

Investments help you achieve your long-term financial goals by allowing your money to grow. They help you to combat the impact of inflation (an upward movement in the average levels of price) on your saved money.

The rate of inflation is important, as it represents the rate at which the real value of investments are eroded, and the loss in spending power over time. Inflation also indicates exactly how much returns (in percentage terms) your investments need to make for you to maintain a certain standard of living. Thus, investments help you to use your money productively. They enable you to meet rising expenses over time. Some of the benefits of planned investments are as follows:

Diversification

Diversification spreads the risk across numerous financial investments. It reduces the impact of poor returns from any one investment say for instance mutual fund in the overall portfolio. The prices of shares, bonds, listed property and other investments often do not rise and fall in tandem. When one type of investment is on the rise, another may be on the decline. The end result is that your portfolio's overall performance is likely to be less volatile when it is diversified.

Asset Allocation

Asset allocation is an investment strategy that aims at balancing risk and reward by selecting an optimised mix of assets according to an individual's goals, risk tolerance and investment tenure. All asset classes may not perform well during the chosen time frame. Therefore, having investment spread in different asset classes in a suitable mix, enhances the chances of an overall good performance of the portfolio.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.