Mutual Funds is an easy step for Stock Market freshers to enter. Since we don’t have enough knowledge regarding Stock Market, Shares and other financial instruments. This seems to be a very good option.
Mutual Funds are for those kind of people who are married and have certain financial responsibilities, who don’t wish to take the risky path of stocks. Compared to Stocks, Mutual Funds are safe bet. Mutual Funds are managed by a Manager or group of Managers depending on size of the Fund.
Why is it safe bet?
The day to-day volatility in stock market is taken care by the diversification present in the Mutual Funds. Hence we need not worry much about the fluctuations in the market. Even if it fluctuates there wont be much variance.
About Fund Managers!
They are keen on managing our money. If they are so sure of managing ours, why don’t they manage theirs and make huge loads of money (Ever wondered?!!). He makes a living by managing our money. He is paid around 2-3% of the Fund amount collected. This will be easily in tens of crores.. Why is he paid so much? Just to manage our money. But still he does not assure us of returns. Since it is difficult to predict the stock market. Fund manager does not even assure us of principal amount.
There is always a note stating the following : “Mutual Fund investment are subject to market risks, please read the offer documents carefully before investing”. I am sure none of us would even bother to read the offer documents or even attempt to do such a job, since it is not for us. Our Job is to just put to sign the documents wherever the mutual fund agent asks us and give him the cheques, thats it.
It is difficult to keep the first step towards a journey, once started I am sure we will move briskly. I don’t wish to run. Mutual Fund is a good start. Let someone else manage your money now. Later you start managing which is essentially yours.