Why Mutual Funds Are Better Option To Create Wealth?

Have you ever thought, how you can build up your wealth

• while fighting the inflation
• while fighting with constant rise in cost of education
• while fighting with constant rise in social demands on house hold front
• while saving in banks, without risking your valuable money
• while staying away from companies offering lucrative returns and turn out to be bogus
• for earning big returns while maintaining the liquidity
• for building a house for yourself
• for saving for your daughter’s marriage
• for saving for your kids’ education
• and for saving for your retirement?

Looks tough. Isn’t it?

But actually it’s not! If you plan your investments properly, it is not all tough to achieve all these goals.

The most convenient solution is “planned investment through Mutual Fund”.

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Now, how to achieve this?

Let’s start with some basic knowledge about Mutual Funds.

Mutual Fund is a financial instrument where large numbers of people pool together their small (or large) amount of savings to be managed by a professional to earn larger returns, in a safer way, by investing in share market or government or non-government bonds.

Mutual funds can be called as the better and safer way to build your wealth for the people who don’t have any knowledge about financial markets.

This is one of the strongest tools to beat the inflation. Let’s consider an example: If the inflation is at 6% and you have Rs. 100 to invest (or save) for a year. If your bank pays 3 to 4% on savings account deposits. After one year your account will have the deposits of Rs. 104 (with 4% return on investment by bank), whereas the value of Rs 105 will actually become Rs. 97.76. That means you have lost around Rs. 2.25 for every Rs. 100. This is the power of inflation. That’s how depositing the money in savings account will actually eat up your existing wealth and will not create any wealth for you.

The requirement for beating the inflation is to acquire the rate of return more than the inflation and providing the liquidity similar to that of savings bank account.

The instrument which fulfils both the criteria is Mutual Fund.

It is highly recommended that you start investing in mutual fund right from the day you receive your first pay cheque.

It is also important to understand that the money you are investing in mutual fund is in the safe hands of a professional, who has deep knowledge of financial markets and is responsible and sensitive enough about your money.

Since, large numbers of people invest in mutual fund, the risk involved in it is widely distributed. Therefore, you can expect higher returns with lower risks involved. Mutual funds can be chosen from wide range. It is recommended to choose a diversified fund to reduce risk.

You can track the development of your mutual fund investment by tracking the NAV (Net Asset Value) which is declared every working day.

So, start investing in mutual funds and create wealth for yourself.

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