The returns become more market-related and vary over time and we can see a lot of variable rate products in the days to come.
Every individual moving in the pyramid of the hierarchy of needs should first satisfy the need for basic necessities in life and then save for their future. In today's environment, it is prudent for any investor to look into the real interest earned as inflation is moving out of gear. It is imperative that the returns be higher without the risk of losing the principal in an investment. This necessitates for optimization of risk and reward.
A common investor necessarily has to invest in bank deposits, post office savings and public provident fund for reasons like liquidity, assured returns and attached tax benefits. Today, RBI bonds also find favor with the investors as they allow investors to save for a fixed tenure with little higher returns.
Herein comes the need for the investors to invest something beyond these avenues, with an appetite for higher returns, of course with minimum risk. Mutual funds provide investment opportunities depending on investors' risk-return expectations. Mutual funds are specialized investment vehicles that allow one to pool savings and consolidate them into a fairly large and diversified portfolio of investment. The pooled funds are invested in securities or assets as per the objective of the scheme in which it is collected and the returns/growth is distributed to the investors. Mutual funds are managed by professionals and are well regulated by Sebi now who keep track of industries/companies and monitor their performance which an individual investor finds difficult. |
