A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. The fund manager invests this pool of money in securities, ranging from shares, debentures to money market instruments or in a mixture of equity and debt, depending upon the objective of the scheme. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Fund managers are professionals who track the market on an ongoing basis. With their mix of professional qualification and market knowledge, they are better placed than the average investor to understand the markets. Since a mutual fund is a trust that pools the savings of a number of investors sharing a common financial goal, the associated risks are greatly reduced. This is also because a fund will invest your money in different types of instruments like shares and bonds. Hence, loss in one sphere will not greatly affect your overall investment status. When compared to direct investments in the capital market, mutual funds cost less. This is due to savings in brokerage costs, Demat costs, depository costs, etc. Investments in mutual funds are quite liquid and hence can be redeemed at the Net Assets Value (NAV)–related price on any working day. All that you invest in a scheme is made known to you and you are periodically informed about all the updates and changes taking place Mutual funds offer flexibility in their options and schemes to match individual needs. Also, with features like regular withdrawal plans and systematic investment plans, you can withdraw or invest funds according to your needs and convenience. Mutual funds offer a vast variety of well-designed schemes and options that you can choose from depending on your risk appetite. In India, these funds become even more attractive because of the tax advantage, indexation benefits, long term capital gains tax, tax free dividends and much more.