Why should one invest in mutual funds?

Wealthy people have their wealth in form which offers them returns. The forms in which wealthy people park their money is real estate, bonds, debentures, mutual fund units, shares and stock along with others.

Take the example of shares which are in fact part ownership of corporations. If you invest in shares of a corporation you in fact own part of it thus taking part in its future profits and losses.

If you invest shares of Cement Company, you expose yourself to risks affecting the cement industry negatively. Moreover, there are some factors that can affect your company specifically like bad management, technological obsolescence and others.

In order to reduce company specific risk exposure, you need to invest in a number of companies. Likewise, if you want to reduce risk exposure to a certain industry you need to invest in different industries.

The more variety of shares you purchase the less risk exposure you will have. Reducing your exposure to risk by way of investing in multiple securities is called diversification.

Diversification when rightly implemented can reduce your risk exposure. But there are costs associated with buying number of different securities e.g. cost of ordering, accounting, etc. In order to get full benefit of diversification you need to invest a large amount in different securities. An individual has limited amount of capital and cannot diversify, which keeps him away from investing.

The problem of small capital can only be overcome by pooling of funds by different interested individuals. But how to pool funds and also the issue who would manage the funds on behalf of investors arises.

The answer to all these questions can be overcome by utilizing a vehicle called mutual fund.

Mutual funds are pool of funds managed by fund manager for the benefit of isolated investors, who don’t have expertise in the investment field.

When you invest through mutual funds, you benefit from the expert management. The analysts working for the mutual fund industry generates financial models which grows your capital as well as provides protection to your capital.

With Mutual fund investing you also get benefit from diversification, and economies of scale.

The one thing anyone interested in investing through mutual funds should keep in mind that the return from mutual fund is dependent not only on the financial markets performance but also the overall economic performance.

So start investing with good mutual fund manager and select the mutual fund after due diligence.

Disclosure: any thing/ content isn’t substitute of professional advice and the blogging team isn’t responsible for any loss/ damage resulting from acting on information from this blog.

What is common among countries with effective Covid-19 response?

Countries with best respons to covid19 have women leaders in common. Countries with female heads performed well in containing the spread of covid-19 as well as containing the casualties. Female leaders have again and again showed the world that they have different focus and they have different way to wield the power. They proved that equal power on the political front can not only benefit the women, themselves but also the wider community.

The notable countries, who responded well to the pandemic, are Singapore, New Zealand, Finland, Germany, Denmark, Iceland and Taiwan.

Let us see the response of female leaders across the world.

Germany

Germany under the leadership of Chancellor Angela Merkel, is conducting the largest corona virus testing in Europe. Testing aggressively like the one Germany did can enhance the ability of country to detect the virus early and isolate and treat patients effectively.

Singapore

A country headed by, President Halima Yacob, immediately responded to the crises. The immediate response was praised by many international observers. The President in Singapore is a nominal head of state. Executive powers rest with the Prime Minister of Singapore.

New Zealand

The Prime Minister Jacinda Ardern of New Zealand took early action of shutting down the tourism and imposing a month long lock-down. Shutting down the tourism was a difficult decision for New Zealand as it relies heavily on tourism.

The Nordic countries
4 of the 5 Nordic countries are led by women.

Finland
The young Prime Minister of Finland Sanna Marin blocked all the roads leading up to Helsinki, area most affected by the virus. Some other measures were reducing the cross border traffic, banning public meeting of more than 10 people and closing down the schools.

Iceland
Iceland under Prime Minister Katrín Jakobsdóttir has put measures like randomized testing, aggressive contact tracing and quarantining the suspected covid-19 cases.

Sint Maarten
Prime Minister Silveria Jacobs of Sint Maarten governs a tiny Caribbean island imposed travel restrictions to contain the spread of coronavirus.

Taiwan
Taiwan President Tsai Ing, as soon as she heard of the novel virus affecting the Wuhan residents immediately ordered to inspect all planes arriving from Wuhan. She also set up the epidemic command centre to monitor the situation.

Michigan, US State
Not only the nation, but jurisdictions governed by women performed well.
The response by Michigan governor Gretchen Whitmer is also appreciated by residents In comparison to Trump’s response.

Why female leaders performed well?
It seems that female leaders care more for health and education for example Benazir Bhutto in her first Govt. implemented the most successful antipolio vaccination drive across the country.

The evolution and the traditional gender role made women, more alert to health risks affecting their nations.

Moreover, the reluctance of male leaders to give in to the pressures for lock-down can be explained by evolution. The men have historically been the one responsible for bread-winning, and they use to think of lock-downs, in terms of lost wages, profits and the accompanied unemployment. Sweden the only Nordic country led by male leader, hasn’t announced the lock-down, thereby facing more deaths than other neighboring countries.

The response to pandemic taught us that man and woman are different with complementary roles to play.