What are the Risks of Investing in Mutual Funds

Mutual Funds are the comprehensive, professional and well-regulated mechanism that makes investments in stock market easy and simple. It is a professionally managed investment vehicle and that enables investors to invest in listed securities.

To invest in mutual funds, you need advice and assistance from the professional advisors who ensure the safety of your investment. In the recent times, a lot of people have lost money while investing in mutual funds. To ensure this doesn’t happen to your hard earned money, investors need to access risks before investing

Risk factors of investing in mutual funds

The mutual funds are susceptible to certain kind of risks that goes beyond the reach of even a professional mutual fund advisor.

1. Market Risks- One of the most frequent risks which are associated with the volatility of the investments is the market risks. The stock market always fluctuates and the NAV of mutual fundsschemes are impacted by these movements. Therefore, there is no certainty that the investmentswill grow, stagnate or go down in value. This is the single most important reason why investors do not invest in risky assets like equity Mutual Funds.

2. Credit Risk- Many a times Investment in debt mutual funds schemes is done in corporatedebt or the commercial papers of large corporates. These companies may fail to meet payment obligations on the set deadline. Thus, it leads to credit risks for the potential investors.

3. Liquidity Risk- At times due to severe liquidity crunch a fund manager is not able to liquidate debt and/or equities, and hence not able to meet redemption pressure. This further erode the market sentiment and in turn leads to a bigger liquidity problem.

Why mutual fund advisors are required?

Contrary to what people think, It is not a child’s play to manage funds. An investor always need hand holding. This is best done by a professional mutual fund advisor. The mutual fund advisor willguide you through investing in mutual funds. Expert advice is based onmarket research, valuation study, market outlook and macro and micro developments in the domestic and international markets. Hence, a Mutual Fund advisor will help you to get higher returns on your investments.

Consult best mutual fund advisors/distributors

At MutualFundWala, Investors get professional and expert advice of various mutual fund productsyou can easily connect with us and get the integrated solutions for short and long term investments.

Prompt and expert mutual fund advice,will not only enable you to grow your hard earned money but will also help MutualFund investorssavemoney while investing.


top