When it comes to investments, mutual funds are one of the safest options to go with. If you are someone who likes to be enlightened with finance related information and investment options, you might have noticed that a lot of articles talk about mutual funds. However, in spite of all the information available, most people have limited knowledge about mutual funds. This article gives you a clear explanation of the various investment instruments like Stocks, Bonds, & Mutual Funds.
Before you begin understanding mutual funds, you must have some basic knowledge about stocks, bonds and other important terms. Below is a simplistic explanation of these important terms which will help you in having a better understanding of the whole concept of stocks, bonds and mutual funds.
Stocks are one of the most highly rewarding investment instruments. These give you the opportunity to hold shares in a company’s ownership. The companies which offer stocks are referred to as public companies as their ownership often comprises of public entities. Examples of these type of companies are Microsoft and IBM.
Bonds are a means of lending your money to the government for their personal uses for a period of time. This type of investment not just brings the principal investment back but you also receive an additional set of amount as interest. Though the interest rates for this type of investment is less, these are safer investment options.
Apart from these investment options, there are other options that can be considered. As mentioned above, one of the safest investment options today are mutual funds. These are very good options for those who do not have much idea about improving their investment portfolio.
One of the simplest definitions for mutual funds is that it is a pool of investments by a group of investors for achieving the desired goal. There is a fund manager who directs the fund. He makes the choices of deciding which specific stocks and bonds to invest in to get the maximum benefits. Mutual fund investors hold shares in the mutual fund itself rather than being individual shareholders of the different stocks. Take a look at the top mutual funds in India for a better clarity of the investment opportunities in India.
Owing to the fact that mutual funds are efficient investment options, they are preferred as the most reliable investment options today. With mutual funds, you minimize the risk of investment. Your funds are handled by experienced financial experts and thus it is one of the safest investment options. However, to be on the safe side, you have to do an analysis of the top mutual funds in India before handing over your hard earned money to these fund managers.
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