- Income is earned from
dividends on stocks and interest on bonds. A fund pays
out nearly all income it receives over the year to
fund owners in the form of a distribution.
- If the fund sells securities
that have increased in price, the fund has a capital
Gain. Most funds also pass on these gains to investors
in a distribution.
- If fund holdings increase
in price but are not sold by the fund manager, the
fund's shares increase in price. You can then sell
your mutual fund shares for a profit
Management - A mutual fund is a relatively
inexpensive way for a small investor to get a full-time
manager to make and monitor investments.
- Diversification -
By owning shares in a mutual fund instead of owning
individual stocks or bonds, your risk is spread out.
of Scale - Because a mutual fund buys
and sells large amounts of securities at a time,
its transaction costs are lower than you as an
individual would pay.
- Liquidity -
Just like an individual stock, a mutual fund allows
you to request that your shares be converted into cash
at any time.
- Simplicity -
Buying a mutual fund is easy! Most Companies have their
own line of mutual funds, and the minimum investment
| What is wealth
creation? In the simplest sense - a desire to be rich, a
desire to have control over the aspects that effect our financial
life, a desire to command respect with the control, our money
path and having more than sufficient funds to cater all are
needs in future. Through mutual funds we can create wealth
and also forgo the market risk factor by a technique called
averaging which can be achieved through Systematic Investment
plan (SIP) and Systematic Transfer Plan (STP).