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 firm in the UK.
Invest in mutual funds with only €5 per month
People feel that in order to earn significant returns, large sums must be invested in mutual funds. Well, you can start by investing just €5 per month and gradually increase your investment as your income increases.
Mutual funds are intended for everyone, from Aam Aadmi to Bada Aadmi (a common man to the high-net-worth individual). There are three mantras to help the small saver aim for a bigger goal:
- Start early – even with a small amount
- Invest regularly – no matter how small it is
- Stay invested for the long term – to give your investments the opportunity to grow
Mutual funds have evolved to adapt to every type of investor over time. Even if the investment amount is low, regular investments and a disciplined approach can help you build a large corpus over time.