Depending upon the risk profile, one should look at investing some part of the savings or earnings in the stock market. But direct investing puts a person at great risk. So, the next best alternative is going for ‘mutual fund’.

One can define a Mutual Fund as a trust that pools in the savings and funds from a large number of investors who have common financial goal. Mutual funds issue units to investors, which represent equitable rights in the assets of the mutual fund.

Mutual fund by its nature is diversified i.e. its assets are invested in many different securities.

Investments in the Mutual funds may be in the form of stocks, bonds or money market securities or combination of these.

These are professionally managed on behalf of the shareholders and each investors holds a pro-rata share of the portfolio entitled to any profits when the securities are sold, but subject to any losses as well.

There are number of schemes of Mutual Fund and all of them have different character and objective.

It is the skill of the investor to keep in view the objective and then take decision where to invest

For e.g. in the wake of boom in the software sector, the Indian Mutual Fund launched various sector specific schemes that entailed only to software stocks for that period.