Mutual
funds are said to be risky. Why is everyone still investing in them?
Yahoo,
in association with Hansi Mehrotra, presents ‘#Ask Hansi’ a new series to help you
get a better grasp of mutual funds and how you can invest smartly. Well, life
is risky and everyone is still living it, right? Jokes aside. So, two things.
One, mutual funds are not risky by themselves; mutual fund is just name of the
structure. It really depends on what kind of mutual fund you invest.
‘’Secondly,
there are different types of risks. There is ‘inflation risk’ – the risk that
you might not keep up with inflation. There is a risk that you might not meet
your goals over the long term. And then there’s some ‘market risk’, which
everyone wants to hear about.
Hansi Mehrotra, a CFA with global experience and founder of The Money Hans, is
a celebrity in the world of personal finance in India. A powerful influencer on
in the corporate/banking/finance circles. She creates fine personal finance
content that simplifies complex issues into easy-to-understand stuff which lay
people can identify with. " You need to make a trade off among all three of
them. So, if you do need to beat inflation and meet your goals, you do need to
invest in something that has a combination of equity and debt, like a balanced
fund or equity fund for that matter, over the long term. The market risk is
basically someone telling you what they could offer you that day. Here’s the
thing, you don’t have to sell it that day. You need to invest over the long
term anyway, so it doesn’t matter what the market risk is… you just ignore it.
Over the long term, you will meet inflation and your goals. So, embrace risk.
Hansi Mehrotra, a CFA with global experience and founder of The Money Hans, is
a celebrity in the world of personal finance in India. A powerful influencer on
in the corporate/banking/finance circles. She creates fine personal finance
content that simplifies complex issues into easy-to-understand stuff which lay
people can identify with.
Happy Investing
Source: Yahoofinance.com
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