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.
Should you invest in a mutual fund on a daily basis?
We grew up listening to the famous hare and turtle story he taught us – slow and steady wins the race. This moral takeaway finds relevance in all spheres of life, including investing. No wonder, systematic investment plans (SIPs) are becoming popular among investors. SIP is an excellent means of constant saving and investment to accumulate long-term wealth.
You can opt for weekly, monthly or quarterly SIP depending on the amount you want to invest in wealth creation. Few fund houses have also introduced daily SIPs. But does the daily SIP help to accumulate more wealth than the popular monthly option? Since SIPs are meant for planning long-term goals, it does not make much difference to the amount accumulated over a 10-15 year horizon, while it can have an impact on the result over shorter horizons. Daily SIPs increase your transactions by one to twenty per month and may become difficult to manage. If you are still wondering: “How to invest my money“? The monthly SIP is a good start.