Last Updated on: 5th December 2024, 04:32 pm
Mutual fund is a pool of fund invested by different investors big or small which is managed by a professional called Fund Manager.
How it works?
Small contribution,Big Impact:
Contribution as small as $100 by 10000 people can create $1000000 fund and can create well diversified portfolio.
Systematic Investment plan (SIP)-
Instead of lump sum, syatematic investment can be done as $10 monthly.
Fractional Ownership: Investors gets units for their contribution for which the get share of the return generated by portfolio.
Mutual fund scope encompass its potential benefit,and opportunities in financial world.Mutual fund is a great solution to those investors who wants to invest but has either no time for reaserch or lack expertise or knowledge required for investing.Scope of mutual funds is detailed as :
1) Creation of Wealth for all
creation of wealth
All type of investors can invest in mutual fund weather big or small and the fund so collected is invested by Fund manager in different asset class,like equity,debt etc.to generate best possible return.It thus helps in long term wealth creation for all.
2)Investment Opportunity for all
It provides investment opportunity for all investors.One can invest as small as Rs.500,through Systematic investment Plan.
3) Tax Benefits
An investor can get tax benefit by investing in different tax relief funds while building wealth.
4)Professional Management
Investing requires lot of expertise,which an individual may lack.Mutual Fund is managed by a fund manager who is qualified and is an expert.Thus one can get his fund professionly managed no matter how small is the investment.
5) Risk Diversification
Through mutual fund one can invest in different asset class,which reduce the risk asdociated with putting all eggs in one basket.When an 8ndividual is investing he/she can invest in one or two asset types owing to small fund size,which is not in case of mutual fund.
6)Secure
Mutual fund is governed by rules and regulations.There are governing bodies in most countries which regulate mutual fund,in India it is SEBI,in USA the SEC.These bodies ensure investor protection and operational transperancy.
7)Global investment Opportunities.
There are international mutual funds which provide opportunities to invest in international markets.
8)Economic Development
Mutual funds channelise funds from retail and institution into different businesses and thus helps in developing economy.
9)Accessibility and Flexibility
Now a days mutual funds are easily accessible to every investor with different options like open ended,close ended,ETFs.These options offer flexibility with redemption options, investment durations and also one can choose funds as per their risk appetite and return expectation. It caters to wide category of people,like students – who save small amounts,middle income individuals -who save to achieve their long term goal.
Conclusion
The main objective of investing is to beat inflation,as bank interest is not enough to cover the inflation.So,itvenables not only to manage tax savings but also save devalution in money due to inflation
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