ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Mutual funds give you an efficient way to diversify your portfolio, without having to select individual stocks or bonds. They cover most major asset classes and sectors.

Detailed explanation-2: -When mutual funds buy and sell stocks, the prices of those stocks are automatically affected. In fact, because of the size of their investments, mutual funds can have a huge impact on stock prices, in both the short and long term.

Detailed explanation-3: -Mutual funds help provide instant diversification since they invest across dozens or sometimes hundreds of individual stocks, bonds, or other securities. Further, history shows that large groups of stocks tend to ride out market volatility better than individual stocks.

Detailed explanation-4: -Which is a better investment? Whether stocks or mutual funds are better for your portfolio depends on your personal goals and risk tolerance. For many investors, it can make sense to use mutual funds for a long-term retirement portfolio, where diversification and reduced risk might be more important.