What Are Mutual Funds?

mutual-funds

One of the best ways to use your money is to make your money work for you. By making your money work for you, you will become wealthy over time. There are a lot of investment opportunities out there. The key is to figure out which one is the right one for your financial situation. This article explains about one of the most popular investment options in India – Mutual Funds.

What are Mutual Funds?

Mutual funds are professionally managed investment pools that show the performance of financial instruments like stocks, bonds, and shares. These are systemized by an advisory body for the purpose of offering the fund’s shareholders a specified investment goal.

Through Mutual funds, investors can buy the shares of stocks of different companies. Usually, the value of these mutual funds are calculated once a day and that is based on what the fund’s current NAV (Net Asset Value) is.

Under a mutual fund scheme, the AMC (Asset Management Company) pools together money from investors and invests it on behalf of the group in accordance with a stated set of objectives.

Mutual funds raise the money by selling shares of the fund to the public. This money is then used to purchase various investment vehicles such as stocks, bonds, and other money market instruments.

How to choose Mutual Funds?

A common criterion that most investors use to scale their investments in mutual funds is the performance of the mutual fund scheme in the past. Some even follow the suggestion of friends or colleagues to choose mutual funds. Others like to follow financial magazines and other similar sources to support their choice of mutual funds. While using these methods can lead one to selecting a quality fund, they can also lead you in the wrong direction and make you wonder what you did wrong.

The past performance of a mutual fund scheme is a good indicator of the fund. However, it does not guarantee that those funds will perform well in the present time or the future. When picking mutual funds, you have to rely on the fund manager. Therefore, researching him/her is a good idea. The fund is only as good as the one who is in charge of it. Therefore, make it a point to do a detailed analysis of the fund manager and study how he has handled the funds in the past and how the funds are performing currently. When you base your investment decisions on this factor, you are likely to invest in the right mutual funds. Take a look at this list of the top mutual funds in India at topmutual.in. You will also find information about other investment options in this website.

I hope you found this post useful and informative. If you have any queries or suggestions related to this post, please drop your comments in the comment section below.  I would be glad to help you out. To show your support, share this post with your friends on social media and elsewhere.

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