Mutual funds is also known as unit trust. Mutual Funds are an investment vehicle that pool together the money of a lot of people to invest in other investment vehicles such as stocks, bonds or other assets. In simple terms, we can view mutual funds as a basket that holds a lot of stocks, bonds and other assets such as real estate. So, as investors, we are actually buying a piece of the fund’s asset.
By investing in mutual funds, we are indirectly investing in a large amount of different assets such as stocks, bonds and real estates. It is a good way to gain more return using less amount of money.
The benefits of mutual funds are diversification and professional management. Both of the benefits are very important because it helps to lower the risk of investment.
Diversification means that we are investing in more than one asset at one time. By using little money, we can invest in a lot of assets such as stocks, bonds, real estates, currency and more. Some of the mutual funds invest in different countries while some invest within their own country. Our money will be invested in diversified asset types to get the highest return possible.
Professionally managed Portfolio:
The mutual funds we invested in is managed by a group of professional fund manager. That is why we have to pay certain amount of fees during investment. That is the fees for managers of the fund. If we are not good at stocks investment, it is advisable to invest in mutual funds because professional managers can help us get the best return using our money.
Mutual funds or unit trust is a good investment vehicle. We can invest for long term and it would be a good buy especially during the economic crisis.
Personally, I have made 38% return from my unit trust investment in less than 1 year time after the crisis of economy.