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Mutual Funds
If you don’t have sufficient
time to study the companies, market and track stock prices, you can
entrust your money to mutual funds. Mutual Fund companies employ
analysts to study, track the companies & market. Hence their decisions
are more knowledgeable than ours.
The risk in mutual fund is
less compared to stock market. Though the NAVs (Net Asset Value) of
follows the stock market trends. In long run the mutual funds yields
high returns. There are to options viz growth option, dividend
option.
Past performances of
mutual fund
One get expect average of
20-30% returns from mutual fund in long run. Sometimes you get 60-70%
also with relatively risk.
Systematic Investment Plan
- Minimize the risk
As we have seen basic
principle of investment is buy-at-low, sell-at-high. But if you
buy-at-high you will incur loss. Since it is difficult to time the high,
low points, systematic Investment Plan is designed. Under this scheme
every month you have to invest in mutual funds. What happens is few of
your installments goes at high points, rest of your installments go at
low level. So, as an average the risk of buying-at-high is limited.
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