Rather than saving money, many embraced the idea of investing money to make it grow. Saving your money into your bank account is also a good idea, but its interest is too low compared when you invest your money to mutual fund.
Then, what is mutual fund?
Mutual means a group of people coming together or having the same goals. Funds mean a pooling of money. A mutual fund is a pool of money invested by investors who wish to maximize their wealth. Therefore, it is a group of people putting their money together and their main objective is to invest in securities such as stocks, bonds, money market instruments and similar assets. The professional fund manager is the one responsible for developing and maintaining a diversified portfolio of security investments.
Why Invest in Mutual Fund?
- Big Interest Rates. In fixed deposit, the annual return will be 8-10%, but mutual funds can give you bigger returns of 12-15% every year. Some mutual funds can even give almost 8-10% percent every month or 70-80% annually.
- Financial Experts. Fund managers are experts when it comes to managing the investments given to them. Typically, fund managers were post-graduates in finance degree. They studied several years related in stock analysis, and investment management. They are an expert by qualification and experience.
- Mutual funds are bringing small investors closer to financial markets. The fund manager who is an expert by qualification and experience takes action in investing your fund in form of mutual fund units. You do not need to release a large amount of money in this business scheme. With the average price of stock, you can participate in capital gains of potential companies.
- Tax-free. Mutual funds do not deduct tax at source of dividends, mutual funds themselves are totally exempted from tax on all income on their investment.
- “Do not put all your eggs in one basket.” Mutual funds manage your money in a diverse portfolio. That means mutual funds are managing to avoid risky investments.
- Keeps Money Market Active. It provides stability to share prices, safety to investors, resources to prospective entrepreneurs.
- Providing Research Service. Investment is done purely on basis of thorough research, and the investor gets the benefit of the research done by the fund.
- Support Capital Market. It provides a sustainable domestic source of demand for capital market instruments. It also provides valuable liquidity to the capital market.
- Promote Industrial Development. It provides financial resources to the industries at market rate. It creates a demand for these capital market instruments.
“Do not put all your eggs in one basket.”
When investing, we are minimizing the risk. Investing in mutual funds is a good choice to multiply the money you invested. As quoted “Do not put all your eggs in one basket”, it applies with investing money in mutual funds. We do not want to lose our hard-earned money, but we make sure that the money we earned is gaining interest. In mutual funds, you let your money work for you, instead of you working for money. Start your investment now! More time spent investing means more time money gaining!
“Don’t work for money, make it work for you.”
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