Mutual Funds - Peeping Into My Mind

“Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing”

I’ve been hearing this for a long time in television ads. Especially that of Franklin Templeton mutual fund investments. Initially I couldnt make out what this guy is saying in a hurry. [Well that is a marketing technique. We'll delve in to that later.] Now let me peep into my past.

I’ve worked in Infosys for around one year. And while I was working I used to wonder am I worth so much money. I guess this is what every fresher would feel. While in college we used to earn hardly anything, there were exceptional geniuses though.

Once the work started treating in its natural way, squeezing all the energy out of us,making us good for nothing but sleeping during the weekends, I realised that we are trapped. We were trapped in such a way that we never bothered to invest money anywhere. Most of the salary was used up in enjoying the worldly pleasures after the hectic week.

Now I sit at home thinking how much time and effort I wasted for some company which spoiled me completely. Hardly I’ve any earnings now. But I have realised a fact that I’ve got out of the blindness. Most of my thoughts are now concentrated on how to invest money wisely so that I wont regret later; like how I do now. And mutual fund ads now captures my interest.

And the past coulple of days I’ve been researching on “what are mutual funds“. Wiki has given its own complex definition for the term mutual fund. A better understanding of mutual fund can be found at investopedia.

As I started sipping a bit from the vast ocean of mutual fund history, I can put up a better definition of mutual funds as

a bunch of financial intellects, ready to help you and like minded individuals with stock trading, where you have to put your share of money and relax and collect the profit percentage from them after cutting down their share from it. Less risky business which will gain you good profit than putting them in a savings account. Also the headache of referring to various financial newsletters and financial analysts are not required.

[Huh.. does that sound more complex than wiki ?!!.]

Getting a bit deeper into the context of mutual funds with the knowledge gained so far: Mutual funds can be considered as a short term investment that yields high profit. Apart from stock mutual funds, that invest in stock exchange, we have bond mutual funds, that gives you a rather steady income by investing in government or corporate business, and money market mutual funds, that invests in short term lending and borrowing.

The advantage of investing in mutual funds lets you have the freedom to sit at home and relax. Being managed by professionals, makes sure that you get the best out of the market. Rather than risking it by pushing yourselves into it and scratching your head all the time.

Since a mutual fund holds collective money from different individuals, investment can be made on high valued stocks which otherwise would have been tougher or impossible. Also since the money is invested in various assets you are at the advantage of making up the loss of one in profit of others.

The simplicity of operation provides you clarity. Also conversion of your share to cash is possible at any time which gives you financial freedom.

Before getting on to the details of investing in mutual funds and top performing mutual funds, I think I should take a break and read more and come back with a sequel to this post.

Till then happy investing guys.

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