Mutual Funds are wealth winners

  

 

As explained in earlier blogs concerning mutual funds, my readers would have realized that investing in a mutual fund is really a prudent manner to go about investing and achieving wealth creation in the long horizon. Indian investors for a long time were dependent on banks and used to invest in savings account and bank fixed deposits, but slowly and steadily they have realized that to beat the eroding effect of inflation they would have to invest in instruments that would offer better returns. Today there are numerous popular mutual fund schemes like HDFC top 200 which as per data has truly beaten average inflation levels in the last five years.

Financial Advisors say that Investing in mutual funds is ideal for achieving long term wealth creation, if investors are looking at achieving long term investment related goals they should look at investing especially in Equity linked mutual funds. Equity funds better known as stock mutual funds are funds wherein investors invest pooled amounts of money in the stocks of public companies.

I would like to tell my readers that stock ownership implies that that the investor owns a certain degree of ownership with respect to the company. Hence he or she is naturally interested in growth of the company as that would directly correlate to the growth of the stocks owned by the individual concerned. In every mutual fund there is a fund manager, who is skilled at taking decisions to invest in stocks and he would take this after much deliberation and brainstorming to make sure that that there is good short term and long term profit and good will for not only himself but also other investors who have pooled their money in the mutual fund he is assigned.

In the current volatile times directly investing in stocks can be quite a risky business, investors should choose to invest via the mutual fund route as it allows investors the safety of investing mutually and in doing so one’s risk is diversified amongst the pool of investors present. I would also like to point out that when one’s risk is diversified amongst various funds the chances of his portfolio growth would be streamlined and not directly attached to a particular stock or company. When one invests in a mutual fund there is a significantly low cost of acquisition.

Also more importantly investors can truly take advantage of the systematic investment plan (SIP) route that allows investors to invest a fixed amount every month in small portions towards the particular mutual fund. Thus they don’t have to take the risk of investing a huge amount at one time especially in a volatile market . On the contrary when the markets are down investing via the mutual fund route is safer and far better method of investing and achieving wealth creation in the long run.

On a concluding note I would like to add that mutual funds are ideal for long term investments and investors should not panic with short term market volatility, if they believe that the fund that they have chosen is good, it’s always good to remain invested for the longer turn to reap good dividends.

This product is truly a wonder, and should be used by investors of all types to achieve their goals of wealth creation in the long run.

Disclaimer:

1. Views as are mentioned in the article are personal views of Author and nothing to link with Co., its Director and Employees.

2. All investments are subject to market risk and you need to consult your financial advisor/consultant before investment

 

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