2. A mutual fund is a tool by virtue of which it accumulates money from the investors and invests on their behalf in stocks and bonds etc; however same is undertaken with the help of professionals who are opaid for the same.
3. One should choose and invest in a mutual fund as per an individual risk profile and thus one has to first of all analyse the fact that how much one is ready to take risk in life. If one is young one can afford to take more risk and thus can invest more in equity oriented funds and should move towards debt oriented funds as one grows old. A safe yardstick is to find the percentage for investment in equity by reducing the age from a figure of 100 to get the required percentage for investment in equity.
4. One must undertake the research and risk assessment before purchasing any mutual fund as past performance is no guarantee for future performance. However if one is not aware of anything about the investment or stock market than the investment through mutual fund is the best bet to avoid losing money. Alternatively one can read this post related to stock market investment to invest inexpensively where the method of investing through ETF has been discussed.
