How a pool of investments can make you rich!
Pablo Escobar was a Columbian drug lord, whose drug cartel controlled the flow of cocaine into the United States in the 1970s and 80s. At the height of his drug trade, it is estimated that Escobar made over USD 22 billion yearly in personal income. So how is this connected with Mutual Funds?
Investing in the Narco trade
Despite the immense risk to wealth and life, his business partners continued to be a part of Escobar’s growing cartel. They reaped the benefits of his business deals and power. As Pablo made more money, the partners also made decent amounts of money.
Pablo’s business, despite the moral wrongdoings, worked due to 4 factors: a great product, new markets, an efficient supply-chain network, and risk taking.
Mutual Funds and why?
Like Pablo Escobar’s business, a mutual fund (MF) comprises of a pool of money taken from various investors, which is then invested into many securities and equity products.
Mutual funds are managed by professional fund managers who have the financial expertise to invest your money into a diversified portfolio consisting of stocks, debt instruments, government bonds, or a combination of all.
Just like Escobar’s appetite for risk taking, there are various types of mutual funds with varying degrees of risks involved. The higher the risk, the better are the returns on investment. You can select the mutual fund that suits your risk appetite and financial goal.
So how are mutual funds beneficial to investors?
- The popular investment mantra of “not to put all your eggs in one basket” applies perfectly to mutual funds because of the diversified portfolio.
- For smaller and regular investments, you can opt for systematic investment plan (or SIP), which gives better returns than a lumpsum investment.
- Due to the large accumulated fund capital, mutual fund companies can buy and sell securities in large volumes. This benefits you in terms of low trading costs and small investments.
- Rupee-cost averaging benefits, where your money buys more MF units when the unit price is low, and fewer MF units when the unit price is high.
It’s time to invest in the right Mutual Fund now, as getting good returns was never so simple!
*All returns are indicative basis past performance. Actual performance can vary.*