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.
Post office savings are another way to put aside a small sum of money every month. Mutual funds are also a great way to plan your future. But many people shy away from mutual funds or investing in the stock market. This is mainly due to the obvious risks involved in such investments.
But as the saying goes “no such thing as a free lunch!’ For best returns, you have to be prepared to take some risks. A mutual fund is an investment tool that pools money from a group of people to form a corpus. The money that is pooled is then invested in the stock market by a group of financial experts. These experts may also be called fund managers.
Investing in mutual funds is not as daunting a task as many would imagine it to be. All that is required is to have a demat account with a bank and one can then log in to the many online trading portals. These trading portals provide all of the necessary information to investors that are considering investing in mutual funds.
There are many different funds available for investment. They are generally classified as equity funds, bond funds and money market funds. All mutual fund plans are variants of these three asset classes. Equity funds that invest in growing companies are called growth funds, while investing in companies in a certain sector are called sector funds or special funds.
Equity funds are funds that invest in shares of a company. This is why they have the most risk involved. But in the long term these funds provide good returns. Fixed-income funds are suitable for investors who want to lock their money and also enjoy the tax benefits 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.