Answer Posted / rohit jain
when a person invests in the market he has to counter the
risk of the market by diversifying his portfoilo that is he
has has to brought the shares from different industries so
that if the share of one industry goes down then the shares
of other industry might goes up and he doesnt looses all
his money. this process of selecting the shares is known as
risk diversification. For this he has to purchase many
shares that requires a lot of money. But what to do when
you have not enough amount of money to diversify the risk?
the answer is Invest in mutual funds. Many small investors
invest a small amount of money in a particular mutual fund
via mutual fund houses. Small amount of money from many
investors results into a chunk of money ready for
investment in market and also with risk diversification.
This money is invested under the guidance of market expert
known as Fund Manager. The total amount of money for a
particular fund is known as Net assets and the value goes
to crores of Rupees. Thus the mutual funds are the route
for small investors to play in the share market by
diversifying the risk.
| Is This Answer Correct ? | 22 Yes | 4 No |
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