What is Mutual Funds?
Most people are not clear about even the basics of mutual funds in India as an investment instrument. So Mutual fund is a financial instrument that allows a group of people to pool their money to build a huge corpus and then this money is invested by group of people (refereed as FUND MANAGERS) who are investment experts, have deep understanding of investing in stock market and overall financial markets. All the mutual Funds have there Units just like "shares" in Company. So if some one wants to invest Rs 10,000 in ABC MF and price for a unit is Rs. 10, he gets 1000 units of ABC MF , and over a period of time as the MF investment grows, the unit price also grows with almost same ratio. The price of these units are referred as Mutual Funds NAV (Net Asset Value) .
How Mutual Fund can help you?
Mutual fund schemes have fantastic ability to beat the inflation and taxes which are the most impediments in the growth of money. Mutual funds are the most suitable those who have distant financial goals, say 7-15 years. It requires self-discipline, regular investing and enough time to create wealth for achieving one's Financial Goals. Before investing in mutual fund, one should have set the financial goals and select the mutual fund scheme, your investment objectives and time horizon help to determine your risk tolerance and ideal asset allocation - the mix of stocks, bonds and cash you want in your portfolio. To help you determine your target asset allocation, PrudentFP offers an online Wealth Magic portfolio platform. Once you have that, you can use mutual funds to construct a diversified portfolio of investments to help meet your needs. Although diversification does not protect against losses in a declining market, it allows you to spread the risk within and across asset classes.