Net Assets – Add To The Value By Investing In Mutual Funds


Net Assets – Add To The Value By Investing In Mutual Funds

To create wealth, investors look for lucrative investment options to invest their hard-earned money. There are a lot of investment options such as fixed deposits, real estate, gold, shares, wealth and insurance plans, mutual funds, etc. Fixed deposits are risk-free assets offering returns that are equal to the inflation rate. Gold rates are fluctuating and increasing at a very slow rate. Investment in stock markets in shares and derivatives is very risky and requires expert market knowledge. Other investment options such as wealth-creating plans are quite fluctuating and thus they do not offer assured returns. To enhance net assets, mutual funds have become one of the most sought after long term investment options that offer compounding returns.

Enhancing Net Assets With Mutual Funds

Equity returns offer investors a risk-free premium. On the other hand, equity investment options also offer high returns. Thus, they are attracting many investors. Investors who invest indirectly in stock lose their investment value because they do not understand market timing and stock charts. But, portfolio managers and stock analysts have a great understanding of market timing, company performance, and stock trends. To reap high equity returns, investors should invest in mutual funds. These funds are managed by experienced portfolio managers known as mutual fund managers.

What Are Mutual Funds?

Mutual funds are a collection of a pool of money from different investors. This money is invested in securities, bonds, and other assets. The experienced mutual fund managers have the responsibility to create capital gains for investors. Moreover, mutual funds offer options to retail investors to invest in equity indirectly with the intellect of professional managers. They can invest either in a lump-sum or a systematic investment plan.

Understanding The Net Assets Value

The funds work with the price of each unit known as Net asset value (NAV). The net assets value is derived by dividing the total securities by the total shares outstanding. Whenever investors redeem their mutual funds, it is done at the current net asset value of the fund. It represents the funds per share value purchased at a bid price from the company.

Types Of Mutual Funds

There are different types of mutual funds based on the type of market, industry, indices, bonds, risk attitude, preference of investors as well as tax benefits.

Equity Growth Funds To Enhance Net Assets Value

Equity involves high risk. Some funds invest only in equity offering higher growth to investors. These are the best for aggressive investors and risk-takers. The funds provide investment options in large-cap, mid-cap, small-cap and multi-cap. Investors can also invest in different types of industries like telecom, auto industry, pharma, FMCG, etc.

Fixed Income Funds

Certain investors are risk-averse investors who look for fixed income. Such mutual funds offer a fixed rate of return to the investors who fear the volatility of the stock markets. The fund managers invest these funds in the bond market.

Hybrid Funds

 Investors who look for high returns with less volatility invest in balanced funds. It invests both in equity as well as debt creating a balanced income for the investors. If stock markets are highly volatile then mutual fund managers protect their income by investing in the bond market. If the stock markets are bullish then mutual fund managers reap higher returns for investors by investing in equity.

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