Planning for the future is something that everyone must do. There are many reasons why you should plan for the future. It could be the future of your children, to pay for their education. It could be your retirement. You can also simply be planning for the future, which may be to buy a dream house or a car.
There are a lot of means by which to make your money grow for you. Most Indians invest in gold. It is an age old tradition because the value of gold is always appreciating. A lot of people also invest in bank fixed deposits. They are a very good way to lock in a particular amount of money for a particular time period.
Postal savings are another way to put aside a small sum of money each month. Mutual funds are also an excellent way to plan your future. However, many people avoid mutual funds or invest in the stock market. This is mainly due to the obvious risks involved in such investments.
But as the saying goes ‘there is no such thing as a free lunch!’ In order to obtain good returns, you have to be willing to take certain risks. A Mutual Fund is an investment tool that pools the money of a group of people so as to build a huge corpus. The money thus pooled is then invested in the stock market by a group of financial experts. These experts are called fund managers.
Investing in mutual funds is not as difficult as many would imagine it to be. All that is required is to have a demat account with a bank, and you can connect to many trading portals online. These online trading websites provide all information necessary for investors looking to invest in mutual funds.
There are many kinds of mutual funds that are available for investment. They are basically classified equity funds, fixed-income funds and money market funds. All mutual fund plans are variations of these three asset classes. Equity funds that invest in fast-growing companies are known as growth funds while those that invest in companies of a certain sector are known as sector funds or specific funds.
Investing in equity funds involves a certain amount of risk as equity basically refers to shares of a company. But equity funds do in the long run, provide good returns. Fixed-income funds are more suited for those investors that wish to lock their money away and also take advantage of the tax benefits that they offer.
The most important thing to remember when investing in mutual funds is diversification. Investors should invest in a basket of securities form high-rick to the most stable. This helps to keep the investment portfolio balanced even during market fluctuations.