Is it wise to invest in a mutual fund?

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One of the biggest difference between the wealthy and the less wealthy is that wealthy people earn interest and less wealthy people pays interest. To reach true financial independence ,you need to have your money begin to work for you. Basically “you shouldn't work for money ,money should work for you “ . There are many ways where you can make your money to work for you. Compounding money is one of the tool which will help your money to work for you .
There are various way to compound your money and one can compound her money by putting it in fixed deposit in any bank without taking any risk at 6% interest rate. But think how much time it will take to double your money . Just don't think about doubling also think about the time duration it is taking .so it's not a good decision to put all your money in FD. But that doesn't mean you should not put money in FD. FD is the safest way to compound and during emergency you can easily take out .
Let's discuss about another way through which you can compound your money with a greater pace . Investing in mutual fund will fetch you huge money in long term . But with greater return , you will have to take a little risk also.
What is Mutual Fund ?
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities, bond,stock etc. These investors may be retail or institutional in nature. These fund will be managed by the professional fund manager in well diversified stock to provide you maximum return with less risk.

Who Should invest in mutual fund ?
Anyone who wants to compound his money quickly with little risk . Anyone who have less knowledge regarding stock market and still they wants to invest money to get maximum return in long term . Time is the key to create huge wealth ,start investing earliest and return will be huge in longer period. Anyone who wants to financially independent can invest in mutual fund
Investing 5000 in SIP for 20 year with expected return of 17% will give whopping 1.0 cr which is huge.
Some tips while investing :
  1. Do SIP not lump sum
  2. Always choose Direct mutual fund plan
  3. Increase your SIP amount once your income gets increased.
  4. Never afraid of bear market . Pump more money when market corrects. Your return will be more if you invest when market corrects.
  5. Don't look at your fund weekly.
  6. Yearly check your fund and see if it is giving return better than their peers
  7. While choosing any fund ,do some basic homework like how the mutual fund plan performed earlier , who is the fund manager, expense ratio, last 5 year return , which company they hold and so many other factor which you can easily Google.
  8. You can invest in sector specific mutual fund plan to gain maximum return but it can be very risky .
Conclusion:
I think it's a wise decision to invest in mutual fund . Mutual fund is little risky but if your investment horizon is for longer period then definitely you are going to create a huge wealth. It's better to start early to become financially independent .

Do you have any questions? Feel free to leave a comment below..

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