As mutual fund schemes invest in stock markets only, are they suitable for a small investor like me?

All mutual funds do not invest in shares alone. Broadly mutual funds can be classified as those investing in equities, debt, commodities or a combination of these. Anyone can find a fund suited to her need. However one must get rid of the fear that exposing to markets is extremely risky and is not suited for small investors. It is in the markets that all the activity happens and that is where business and real money is generated.

Since small investors do not have the knowledge and time required for zeroing in on securities of healthy companies, they can rely on mutual funds for this. Just sticking to fixed income assets (FD, bonds) would leave your investments crippled and will never grow more than inflation rate in the long term to meet unavoidable needs like retirement corpus, funds for child’s education, marriage etc.


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