Investing In mutual funds Essay Example | Topics and Well Written Essays - 500 words

Investing In mutual funds - Essay Example Banks, share markets, mutual funds, insurance sector and real estate are some of the common investment areas normal investors are looking for. Bank investments are normally the best method of investment because of the less risk associated with it. Most of the banks have insurance protection for the investor’s money and hence it is safer than other types of investments. Bank deposits normally divided into two categories like savings account which yields less interests and term deposit which yields higher returns. Share market investment is the most risky investment option since the value of money undergoes immense fluctuation every day based on the changes in the share values. There is no protection for the investors in this sector as we have seen in the destruction of share values due to the current economic crisis. The main attraction of share market investment is the possibility of high yield in a short term. Real estate and investment also depends on the market conditions. Investment in insurance sector is also comparatively a safer method of investment though the return may not be as good as that from share market investment or mutual fund investment. â€Å"Mutual funds can offer the advantages of diversification and professional management. But, as with other investment choices, investing in mutual funds involves risk. And fees and taxes will diminish a funds returns.† (Invest Wisely: An Introduction to Mutual Funds) Compared to share market investment, mutual fund investment is safer because of the professional management of our invested money. Share market investment is mostly controlled by the investor himself and hence the possibility of achieving a good return depends on the investor’s competence in analyzing the trends in stock market or company performances. On the other hand in mutual fund investment, the investor’s money is managed by fund managers. The mutual fund managers are highly skilled and they know better than us