8.2Why do mutual funds exist?
1What is it?
They exist to make investing simple, affordable and diversified for ordinary people.
2Why does it exist?
Buying 50 different stocks yourself needs lots of money, time and knowledge. A fund does it for you, so ₹500 a month can own a slice of 50 companies.
3Quick revision
- Simplify investing.
- Make diversification affordable.
- Give access to professional research.
4Knowledge check
Q1. Could you buy all 50 Nifty stocks with ₹500?Show answer
Not directly, but an index fund lets you own a slice of all 50.
Q2. Name two problems funds solve.Show answer
Lack of time/knowledge, and the high cost of diversification.
Q3. Who benefits most?Show answer
Small, busy, or beginner investors.