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Investing in a mutual fund is not necessarily less of a risk. What makes a mutual fund less riskier than a single stock is that the risk is spread out amonst many more companies. Let's assume the mutual fund you own owns stock in 100 different companies. If one of those companies go bankrupt, you'll probably only lose on average 1% of your money. If you own stock in a single company and that company goes bankrupt, you lose 100% of your money. But let's assume you have stock in a very safe company like McDonald's and your friend owns a mutual fund which is comprised of 50 new fast-food restaurants. Your stock in McDonald's may actually be less of a risk than in that type of mutual fund. So, it's important to see what types of stocks a mutual fund is comprised of before assessing how safe or risky it is.
Wiki User
∙ 15y ago
Wiki User
∙ 15y agoMutual fund investments are not risk less.
They come with their inherent risks because the money is invested in the Stock Market and the profit or loss in the mutual fund depends on the performance of the stocks bought by the fund house.
The only point here is that, since the fund is managed by experts the chances of loss is less when compared to we buying/selling stocks ourself.
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When you own a mutual fund what exactly do you own?
Mutual fund is a low risk investment. If you invest in a mutual fund, you owns shares of the mutual fund company who is selling you fund. But you do not actually own any underlying asset of the stocks or securities that mutual fund has invested in even they are using your money to invest.
What are the benefits of investing in a mutual fund?
A mutual fund allows a customer to benefit from investment classes that would not be available to a smaller investor, and allows them to receive the expertise of experts that would not be an option unless they enter a collective investment vehicle. Mutual funds are also much easier than managing one's own investments.
What is the difference between a mutual fund and a bond mutual fund?
A Bond mutual fund is a type of mutual fund that invests in bonds and other government securities that are safe and have a fixed rate of return. Whereas the term mutual fund per say refers to equity mutual funds in most cases which invest in the stock market.Bond mf's are safer whereas equity funds come with a certain risk component but at the same time the returns on equity funds are much higher when compared to bond fundsAnswer:Bond funds are investment vehicles that are meant specifically for people who are looking for low risk investment options, but want higher returns than they would get from a fixed deposit. The NAVs of most bond funds don't fluctuate as much as equity funds. Bond mutual funds invest in bonds issued by the government or corporate houses. Mutual funds investment involves a group of investors pooling in their money to invest in securities, which could be stocks or bonds. Mutual funds are considered a low risk-high return investment vehicle. If you're interested in mutual fund investment, you may want to get some professional advice.
What statement defines a mutual fund?
A Mutual Fund is nothing but a common pool of money collected from a lot of people which is used by an experienced fund manager who invests the money in the Share market. Not many of us are experienced in investing directly in the Equity market. Mutual funds are a boon to the investor who doesnt have enough knowledge to invest directly in the market but wants to take a risk and gain higher returns from the market.
How does the risk involved in a money market mutual fund compare with the risk of a certificate of deposit (CD)?
the risk of the money market mutual fund is slightly greater than that of the CD
What are the guidliance issued by sebi for advertisement published by mutual fund?
Mutual Fund investment are subject to market-risk, please read the offer document carefully before investment
When you own a mutual fund what exactly do you own?
Mutual fund is a low risk investment. If you invest in a mutual fund, you owns shares of the mutual fund company who is selling you fund. But you do not actually own any underlying asset of the stocks or securities that mutual fund has invested in even they are using your money to invest.
Which form of investment has the most amount of risk involved savings account or checking account or mutual fund?
Out of the three options, a mutual fund has the most amount of risk involved. While a savings account and checking account typically have very low risk, mutual funds are subject to market fluctuations and can experience losses. The level of risk in a mutual fund depends on the types of assets it holds, such as stocks or bonds.
What are the benefits of investing in a mutual fund?
A mutual fund allows a customer to benefit from investment classes that would not be available to a smaller investor, and allows them to receive the expertise of experts that would not be an option unless they enter a collective investment vehicle. Mutual funds are also much easier than managing one's own investments.
Can you please tell me how do we select a mutual fund?
The first step is to find out the objectives of investment.The objectives of investment in mutual fund will be low risk or high risk. If the objectives of the investement are same as the investors, then one can go on to the next step. It is very important to evaluate the past performance of the mutual fund. Through this evaluation an investor can get an idea of performance of the mutual fund. There are lot of online trade portals that provide the information like Reliance mutual fund,ICICI,HDFC.
How do mutual funds reduce the risk of loss?
Mutual fund do not reduce the risk of loss.
What is the difference between a mutual fund and a bond mutual fund?
A Bond mutual fund is a type of mutual fund that invests in bonds and other government securities that are safe and have a fixed rate of return. Whereas the term mutual fund per say refers to equity mutual funds in most cases which invest in the stock market.Bond mf's are safer whereas equity funds come with a certain risk component but at the same time the returns on equity funds are much higher when compared to bond fundsAnswer:Bond funds are investment vehicles that are meant specifically for people who are looking for low risk investment options, but want higher returns than they would get from a fixed deposit. The NAVs of most bond funds don't fluctuate as much as equity funds. Bond mutual funds invest in bonds issued by the government or corporate houses. Mutual funds investment involves a group of investors pooling in their money to invest in securities, which could be stocks or bonds. Mutual funds are considered a low risk-high return investment vehicle. If you're interested in mutual fund investment, you may want to get some professional advice.
How does the risk involved in a money market mutual fund compare with the risk of a certificate of deposit?
The risk of the money market mutual fund is slightly greater than that of the CD
How does the risk involved in a money market mutual fund compare with the risk of certificate of deposit?
The risk of the money market mutual fund is slightly greater than that of the CD
What statement defines a mutual fund?
A Mutual Fund is nothing but a common pool of money collected from a lot of people which is used by an experienced fund manager who invests the money in the Share market. Not many of us are experienced in investing directly in the Equity market. Mutual funds are a boon to the investor who doesnt have enough knowledge to invest directly in the market but wants to take a risk and gain higher returns from the market.
How does the risk involved in a money market mutual fund compare with the risk of a certificate of deposit (CD)?
the risk of the money market mutual fund is slightly greater than that of the CD
What are mutual funds for?
Mutual funds are investment instruments that are meant for people who have a smaller appetite for risks, but seek higher returns than they would get on simple saving accounts or fixed deposits. That's not to say that mutual fund investment is free of risk. Mutual fund investment offers schemes that suit all types of investors. Those who have a larger appetite for risk can invest in equity funds, while those who want to minimize their risks should look at investing in bonds. A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want.Know more at : assetmanagement.kotak.com
