A mutual fund is a professionally managed company that collects the money of many investors and invests it in securities such as stocks, bonds and short-term debts, equity or bond funds, and money market funds.
Mutual funds are a good investment for investors who want to diversify their portfolio. Instead of focusing everything on one company or sector, a mutual fund invests in different securities to try to minimize portfolio risk
The term is typically used in the United States, Canada, and India, while similar structures around the world include the SICAV in Europe and the open-type investment firm in the United Kingdom.
We must eat a balanced diet for the growth and general well-being of our body.
Our body needs different nutrients to stay healthy and in shape, and one type of food cannot provide all the necessary nutrients. So, we must eat different types of food in the right proportion to maintain our body. Each nutrient has a unique role to play in the well-being of our body (e.g. carbohydrates give us instant energy while proteins help in tissue growth and repair).
Likewise, we need a balanced investment portfolio in life to ensure our financial well-being. Within the portfolio, we need a mix of different types of resources that play different roles such as the various nutrients in our diet. You should invest in different types of assets such as stocks, fixed income, gold, and real estate for financial security and prosperity. Individual investors may have difficulty investing directly in certain asset classes such as fixed income, which includes bonds and money market instruments. Instead, they can invest in debt funds that invest in those securities. They offer lower but relatively stable returns, thus providing balance to your equity, gold, and real estate investment portfolio