Mutual Funds are one of the most popular and smart ways for investors to build wealth over the long term. Mutual funds are a type of certified managed combined investment schemes that gathers money from many investors to buy securities.

There is no such accurate definition of mutual funds, however, the term is most commonly used for collective investment schemes that are regulated and available to the general public and open-ended in nature. Hedge funds are not considered as any type of mutual funds.

The investment portfolio of a mutual fund investment is continuously monitored by the funds Portfolio Manager or Managers who are either employed by the fund's Manager or the Sponsor.

Advantages of Mutual funds are:

Increase in diversification

Liquidity on a daily basis

Professional investment management

Capacity to participate in investments that may be available only for larger investors

Low Cost

Tax Benefits

SIP

Systematic Investment Plan or SIP is a smart and powerful way of investing in Mutual Funds through small and periodic installments. The biggest advantage of SIP that one need not time the market and two powerful strategies can be availed- Rupee Cost Averaging and Compounding.

Rupee Cost Averaging: Buy more units when the prices are low and fewer units when the prices are high. This brings down the average cost of units.

Power of Compounding: As an investor, when you extend the investment period, you can earn profit not only on your original investments, but also on any interest, dividends, and capital gains that accumulate, so your money can grow faster and faster as the years roll on.