What are mutual funds?
Mutual funds are professionally-managed investment schemes, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities. They are investment avenues for small and large investors alike, wherein the investors’ money is pooled in and professionally managed and invested by fund managers. This benefits investors as they can get the advantages of scale as well as returns from a professionally managed portfolio at a fraction of the cost of what it would otherwise.
When should I buy them?
There are several factors to consider while buying a mutual fund, but one of the most important is When! If there is a bull market it is normally considered a good time to invest in the equity markets, however, caution should be taken to ensure that one does not invest at the peak and lose one’s capital. Unlike popular wisdom, it is actually a good time to invest in the stock markets (via mutual funds) when the markets are down. The worse the markets are, the better returns you are likely to get in the medium to long term. Therefore, it is advisable to buy them when the price is low.