Mutual fund is increasingly getting popular since last few months. Mutual funds are a fund that invests investors’ money in various companies. Since the investment is in a set of companies, any upside or downside in a few companies is compensated by the reverse in other companies. This is what makes mutual funds attractive. It makes sense for individual investors to invest in mutual funds. Investment rationale in mutual funds As explained earlier mutual funds invest in a set of bonds and stocks depending on type and target investors of the fund . It essentially minimizes the risk because of investment in various assets. Any fluctuation in one or few assets is usually offset by reverse gains and losses in other set of assets which are part of mutual fund. Let me illustrate with an example. Say XYZ equity fund invests in approximately 40 companies. The possibility of shares of all the firms going down at the same time is very remote unless there is huge disaster in the economy. H...