Understanding Mutual Fund Investment

1
Understanding Mutual Fund Investment
https//financebuddha.com/
2
?How Mutual Funds Work?

• Mutual funds are operated by professional money
  managers, who are responsible for allocating the
  funds in order to make a capital gain from the
  fund invested. 
• As an investor, you can buy mutual fund units,
  which represent your share of holdings in a
  particular scheme. These units you purchase can
  be redeemed as needed at the funds current net
  asset value (NAV). However, the NAVs keep
  fluctuating according to the market and funds
  holdings. So in order to make a profit, it is
  important to invest after properly analyzing the
  scheme.
• However, Mutual fund investment has advantages
  and disadvantages both as compared to that of
  direct investing in individual securities.

https//financebuddha.com/
3
The Advantages of Mutual Funds include

• Economies of scale
• Superior diversification
• Liquidity
• Flexible Investment
• Fair pricing
• Advanced portfolio (professional) management. 

https//financebuddha.com/
4
The Disadvantages of Mutual Funds include

• Tax inefficiency
• Lock-in period
• Fluctuating Returns
• Poor trade execution.
• high expense ratios
• Needs research 

https//financebuddha.com/
5
Key Highlights of Mutual Funds

• A mutual fund is an investment scheme that offers
  you to invest in stocks, bonds, or other
  securities. 
• Through Mutual funds, you get access to
  diversified, professionally managed portfolios.
• Mutual funds are divided into different
  categories, depending upon the kinds of
  securities one wants to invest in, investment
  objectives, and based on returns offered.
• When investing in Mutual funds you need to pay
  annual fees (expense ratios) and commissions(not
  in all schemes).

https//financebuddha.com/
6
Factors to consider before you decide to invest
in Mutual Funds 

• Investment objective
• Time Horizon
• Risk Tolerance
• Fund Size

https//financebuddha.com/
7
Thank You!
https//financebuddha.com/