You must have seen many advertisements for mutual funds, but what is a mutual fund, how does it work and how can one earn profit by investing money in them? Are you thinking of investing or investing but do not know where to invest the money, how much to invest, or what? How much will you save, then mutual fund can be an option for you, but what is this mutual fund? You will get answers to all these questions in this post.
A mutual fund is a fund in which there are many investors, be it me, you, or anyone else, fund managers aim to invest your money and this amount can be invested either in the stock market, in bonds, or gold. You can invest your money in this or other securities. These fund managers have a deep hold on the stock market, the country’s economy, international market, and these fund managers aim to give good returns and profits to the invested amount with minimum risk.
- You Want to purchase a share of MRF Company worth Rs 1,18,000.00 but your budget is only Rs 11800.
- In such a case, you will either not purchase the share or ask your 10 friends to contribute Rs 11800 each for purchasing the MRF share.
- you will gate to 10% share in the one MRF share if you Purchase the same with a friend contribution.
The same concept is used in mutual funds
in mutual funds, several investors pool money and this money is invested in the market ( stock, bonds, and short-term debt )