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₹5000
8%
10 years
What is a Mutual Fund?
A mutual fund is created when a company collects money from multiple investors and invests it in various securities. Each investor owns shares of the mutual fund, which represent a proportionate interest in the fund’s total assets and returns.
Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are managed by professional investment managers who make decisions on behalf of the investors, aiming to achieve specific financial objectives. Mutual funds are popular among individual investors due to their accessibility, diversification, and professional management.
Key Features of Mutual Funds:
- Diversification: Mutual funds invest in a wide range of assets, spreading risk across various securities. This reduces the impact of any single investment’s poor performance on the overall portfolio.
- Professional Management: Fund managers use their expertise and research to manage the fund’s portfolio, making investment decisions that align with the fund’s objectives.
- Liquidity: Most mutual funds allow investors to buy or sell shares on any business day, providing relatively quick access to their money.
- Affordability: Investors can start investing in mutual funds with a relatively low initial investment, making them accessible to a wide range of individuals.