Gone are the days when the only methods of investment were property, gold and fixed deposits. The modern age technology has revolutionized the way we invest. Mutual fund is a new age instrument that a uses multiple forms of investment.
Mutual Funds are investment vehicles which collect money from all the investors and invest in bonds, equities and/or money market instruments. These investors share a common objective, as in the kind of instruments the investment has to be made, or the combination of two or more kinds, or on the basis of risk profile. They help you mitigate risks like inflation and currency depreciation.
A wide range of good funds is key to the growth of your savings invested in such programs. You can build a well-diversified portfolio of Mutual funds investing in various asset classes, geographies and sectors. Depending on your investment horizon and financial goals, you can choose to invest over short medium or long terms for your portfolio.
A Systematic Investment Plan (SIP), which is another mode of investment in a mutual fund scheme is fast gaining popularity amongst investors. Where in you can purchase mutual fund units of the fixed price in regular intervals. This fixed amount gets deducted from your bank account at regular periods, which you decide beforehand.
The interest on your investment over time gets compounded with time and what you receive when you redeem is your invested amount + accumulated interest.
If you invest Rs. 5,000 monthly for the period of 30 years, your SIP amount will grow to Rs. 1,76,49,569, against your investment of just Rs. 18,00,000. Hence your investment is roughly equal to 9.8 times your investment amount.
Mutual Funds are a great investment option mainly because they offer better returns than traditional investment options and are best modes of investment for those who lack huge amounts of money. You can choose from a variety of schemes depending upon your risk profile.
To know more about mutual funds in UAE and to help you build a robust portfolio, arrange a meeting with me.