Being a university student, we have to keep a track of our spending and manage our monthly budgets within the pocket money we receive every month from our parents. The best way to spend more is to save more. The idea is to start investing money from an early age so that one can build a habit of saving money, and also get a return on it, rather than just parking your excess cash at home. Today, I am going to tell you an interesting way to save your money by investing it in mutual funds.
Mutual fund is in essence a financial vehicle that consists of a pool of money collected from many investors to be invested in different securities e.g. stocks, bonds, money market instruments, and other assets. The working of mutual funds is as simple as ABC and can even be understood by a person who does not have any experience of accounting or finance knowledge. Why? Because the biggest advantage of investing in a mutual fund is that they are managed through the expertise of professional financial managers. The key advantages of investing in mutual funds are that you can invest as low as Rs.5000, and the investors are not burdened with the responsibility of selecting the stocks and bonds to be purchased according to a specific amount, or the day-to-day management and safekeeping of the investments selected.
To make an investment in a mutual fund you simply have to open an account with any asset management company whose sales associate will manage all your documents and advise you about investing your money in different pools. A variety of different plans are offered by the AMCs and you can choose the plan that is more convenient for you. For example, you can either opt for a short term saving, or a long term saving investment. It has been a long held belief that mutual fund investments are for long term investors, but it is not a fact. There are a number of money market funds that are ideal for short-term investors. These type of mutual funds offer high liquidity and good returns.
Mutual funds provide you a platform to invest money in a plan that would give you healthy returns by investing an amount of your own choice. Making an investment in mutual funds is less risky as your money is diversified into different pool of investments. Therefore, in case of any disruption in the market, you will not stand at a complete loss but your collective risk will be mitigated.
Written by Rumsha Suhail
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