A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment company in the UK.
Are there any special funds that help create long-term wealth?
In name, inflation is a phenomenon that inflates the cost you will incur to achieve your life goal when the time comes to achieve it.
Diversified equity funds offer the opportunity to create long-term wealth at reasonable levels of risk. The risk associated with equities is controlled with equity mutual funds due to three factors
- The experience of the professional fund manager managing the fund
- Diversification of risks due to investments made in a basket of securities
- Long-term investing that reduces the impact of short-term volatility
While it’s true that stocks as an asset class
offer investors the opportunity to create wealth, it’s important to keep in mind that stocks as an asset class are volatile in the short term. Therefore, it is necessary to invest for the long term.
