The Importance of Mutual Fund With Respect to Financial Planning

Before we get into the finer nuances of mutual funds and their relevance to planning your finances, let us understand what they are. A mutual fund is a financial tool that collects investment capital from multiple entities. These could be either private investors or companies themselves or other financial institutions. A fund manager who presides over this collected wealth invests it in a gamut of wealth creation products depending on the objective of the fund. The returns are then divided proportionately among the shareholders of the fund. That, in a nutshell, is how the mutual fund business operates.