What is the proper definition of a mutual fund? I want to invest Rs 4,000 to Rs 5,000 every month for life insurance. Please tell me which company has the best policies today.
-Vedkant
Simply said, a mutual fund is a diversified portfolio of investments. If you invest in an equity mutual fund, you take part in the growth of the companies that the fund invests in. On the other hand, in case of debt funds, you loan your money to the fund to buy bonds and get an appreciated amount in return. Investing in mutual funds is more convenient than investing directly in stocks or bonds, which can be a highly complex process for an ordinary person. Apart from that, you get the benefit of better diversification from a professional fund manager. Of course, you get these benefits at a cost that you pay in the form of fund expenses.
Coming to your second question, before buying an insurance policy, figure out the amount of insurance you would need and don’t look at insurance as an investment. Ideally, you should opt for simple term insurance.
This article was originally published on March 29, 2012.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
