Mutual fund is the car which will get you to your destination in a very new fashion that was not very much known in the earlier times. It is like a car pool where many people travel in the same car to reach the same destination in order to reduce the carbon footprint and save the environment and in investment mutual funds are similar to car pool as they are a collection of funds or shares of companies where the money you come up with is invested to get you your goal and this results in considerable reduction in risk and saves your return value in cases of a fall in the share values of the company had you invested in a single company. To get to know about various funds and invest in them click here.
Mutual funds are managed by big companies which have a qualified, trained and experienced team at their disposal and thus these are the schemes which have been really researched upon and thought out well enough. These manage the portfolio of the investor in such a manner that the investor has the minimum possible risk and maximum profit. If we expand the idea of the mutual funds and go through its depths, it is like having a slice of pizza rather than a whole pizza and thus in the package there are many slices of various tastes thus if some turn out to be not good you don’t have to bear the whole thing. In the similar way the money investors pool is invested in shares, equity and bonds of various companies and the government schemes and thus when if some share loses their value and the return on them is endangered it is like a slice of bad pizza you don’t have to bear the whole thing and in the end the return doesn’t get affected that much.
There are many types of mutual funds but that is another discussion and here we would be talking about balanced fund which is also a type of mutual fund and we would be discussing everything that is there to know about it.
Balanced fund in itself is a layered mutual fund as it combines an element of stocks and investment in bonds as well. there are times when it incorporates the element of money market. This combines in a single portfolio to give you a combination of equity, bonds, shares and thus a moderate portfolio which has a moderate return and has very low risk. These mutual funds are designed for investors which are looking for modest return for very low risk and they have a minimum and a maximum well defined in their minds and they just need asset management not much growth.
- But that may not always be the case with balanced funds as there are many things which one gets to know about balanced funds when they are broken down.
- The balanced funds are a diversified investment scheme and the money is invested in a wide range from bonds to shares as already mentioned which gives the variety in the portfolio making it varied.
- These are managed by very experienced professionals and most of them are experts in their fields as they have to ensure minimum risk.
- These have adaptability to varied market conditions where if shares don’t perform due to market losses then bonds are the ones which give return and vice versa.
- But there are times when balanced funds have more equity portion and thus have higher risk value so one should be careful before investing.