Mutual funds are considered safer than individual stocks, as they provide diversification by investing in a range of securities. However, the safety of a mutual fund scheme depends on the category of fund you choose. Debt funds that invest in bonds are relatively safer but offer lower returns, while hybrid funds are moderate risk and offer moderate returns and equity funds have higher risk and are capable of giving higher returns. Always assess the time horizon of your goals and the risk tolerance before choosing a mutual fund scheme.
Equity Mutual Funds invest in anywhere between 20 to 90 stocks or more. This diversification along with the backing of extensive research and professional management by qualified fund managers helps to reduce the risk when compared to individual investors investing directly in stocks.
