Wednesday, November 12, 2008

Mutual fund.......investment at low cost and risk.

Mutual fund is just like a Mall where you get most of the things under one roof. The only difference is you don't need to visit each store or counter for different things. It's all done by the fund manager. It's a collective investment scheme where the funds of many investors are collected together and invested in bonds, stocks, short-term money market instruments, and other securities.The profit from these investments are then shared by its units holders in proportion to the number of units owned by them. In my opinion, Mutual funds is the most suitable investment for a beginner or common man, as the funds here are invested in a diversified and professionally managed way at a very low cost and risk.

Let me list the advantages of investing in a Mutual fund. Here it is:

. Proffesional management
. Convenient Administration
. Diversification
. Low cost
. Transparency
. Return Potential
. Liquidity
. Choice of schemes
. Flexibility
. Well Regulated
. Tax benefits

Now a days Mutual funds are becoming more popular. The main reason behind this is the disappearence of traditional pension funds. Workers used to depend on their employer to get certain amount for the duration of their retirement. Now it's their responsibility to manage their own money. Till last year (2007) approx 44 % of US households invested in Mutual fund.

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