Learn more about moneyandinvestments with this collection
The impact of opportunity cost on personal and professional life
Evaluating the benefits and drawbacks of different choices
Understanding the concept of opportunity cost
Risk
Each category of mutual fund has a different risk vs return profile. For example, equity mutual fund provides a higher return than debt mutual fund but the risk is also high. Risk is in terms of volatile returns.
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What are Mutual funds?
Mutual funds are financial products built to provide good returns to the investors and eventually create wealth.
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Equity Based
Equity-based mutual fund funds are further divided into various categories. For example, one of the categorizations is on the basis of company market capitalization into large-cap, mid-cap, small-cap, multi-cap, etc.
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Debt Based
Debt funds are divided into short term debt fund, long term debt fund, ultra short term debt fund, liquid fund, etc.
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For example,
For example, equity mutual funds will invest in equities(stocks) and debt mutual funds will invest in debt instruments like bonds. Balanced and hybrid mutual funds will invest in both equities and bonds.
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19 | Generalist, Content Creator, Student at Christ University. Stashing about entrepreneurship, self-help, spirituality and the most interesting stuff I read.
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An honest risk-assessment
Think about how much risk you are willing to tolerate:
- If you are looking for quicker returns, you may prefer a more volatile portfolio of individual stocks, ETFs, or high-risk mutual funds.
- However, if you want to build your portfolio for retirement or savings,...
Smart retirement planning boils down to a few simple truths.
- Time is on your side. The earlier you start saving money, the more time you give compounding to work for you.
- Take risks when you're young. Although stocks are three times more volatile than government bonds, it earns nearly twice the average annual return.
Number of stocks in a portfolio
If you want optimum returns on your portfolio, you need to have a maximum of 3-4 stocks (with the ratio 40:30:30) but it will have a higher risk.
If you want good returns with little risk then you need to have 6-8 stocks.
But if you want to take a minimum risk and be satisfied with ...
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