You must have heard the term “Mutual Funds” a number of times earlier and wondered what exactly it is, right? Well, if that is the case then you are not alone.
It is important to know about Mutual Funds in thorough details as many consider it to be tricky. But, in reality Mutual funds can be so much profitable when you agree and invest skillfully. Having a clear idea about Mutual Fund is absolutely necessary as the market risks are concerned. It is always better to step out well prepared before any practical action, especially when it counts for money.
However, Mutual Fund is nothing scary. Instead, you maybe even surprised to look at the advantages that are there in Mutual Fund. So, when you think about investments, Mutual Funds are the most viable option for quick money as per the present day market.
So what is Mutual Fund actually?
Mutual Fund is basically an investment fund or an investment scheme. It is professionally managed and operated by adept investors. Also, the Mutual Fund is mostly funded by the share holders. Here, money is pooled from several and different investors for the purchase of tradable financial assets that are also known as securities.
Here’s how it works.
The Mutual Fund collects the money from the interested investors. Then this collected money is invested on behalf of the investors. The process of investment is such that you can buy mutual fund “units” as an investor. These units are basically the shares you are holding, so accordingly your interest is calculated.
The current “net asset value” or NAV of a fund is to be kept in consideration as they are prone to frequent fluctuations according to the holdings of the fund. The units that you purchase can be redeemed as per requirement at the current NAV. So, you must keep a check on when the NAV is on the rise for a maximum profit margin.
