Mutual funds are not only about stock market investments. Yes, some funds invest your (and other investors' money) money into stocks listed on stock exchanges but not all of them do so. Funds that invest in shares are equity funds while those which don't invest in other assets such as debt securities, gold, real estate, etc. What it means is if you do not want your money to be invested in the stock market, it's perfectly fine. Some funds allow you to park money in other instruments ( other than stocks) and yet generate a decent return. We will see which funds are those and which goals are they suited to, later on.
Similarly, there are a few other myths, we visit them later after exploring the world of mutual funds much more comprehensively.
Mutual funds are essentially pooled assets. Simply put, a mutual fund company collects money from investors and invests in shares, bonds, government securities, and several other regulated instruments, on their behalf. Think of it, even you can buy any of these instruments, shares, bonds, etc but then why choose to invest through mutual funds?
Here's why choosing mutual funds to meet your goals is a better-informed decision.
ADVANTAGES OF INVESTING IN MUTUAL FUNDS
- Get professionals to manage your money
- Helps to spread risks
- Entirely regulated market