Advantage of investing in Funds

Funds offer an investment platform to investors with limited investment capital to participate in the performance of a variety of equity as well as debt instruments. Funds offer diversification or access to a wider variety of investments than an individual investor could afford to buy. That involves reducing the risk to your assets by buying a mix of stocks/bonds from different industries and investments of different types. For investors with limited time to spend watching the ups and downs of the markets, funds offer a good alternative.

It tends to be more liquid and less volatile than individual investments especially in a volatile market scenario, which is persistent currently. However, one must understand that you might not get adequate diversification by investing in a single fund. An oil and energy fund might spread your money over 50 companies, but if energy prices fall, your savings will suffer. Instead, look for a fund that will spread your assets among several leading industries. You’ll take advantage of pop in any one of them while avoiding a big hit if one sector has a rough year.

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