What is Mutual fund?
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Mutual fund is an investment option which pools investor’s money and invests in stock markets for generating better returns and diversifying risks. The collective holding of invested amount in mutual funds is called as portfolio.
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It’s not an alternate to stocks, but its collectively investing minimizing the risk involved in stock markets.
Why invest in mutual funds?
Simple, to diversify risks it is recommended to invest in mutual funds rather than stocks where your investment is linked to one or two specific stocks. In mutual funds, the fund manager purchases many stocks from the same sector, as well as diversifies the investment in different sectors to broaden risks.
So even if one or two stocks fail, it does not affect the entire invested funds as the risk is minimized.
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Individual’s Risk assessment for investing in mutual fund-
Individual’s Risk assessment for investing in mutual fund-
