Mutual fund investment is bound to take an investor places where investment returns are concerned, and the popularity of this channel is just growing daily. However, there are some people involved in any mutual fund investment, and other investments, and these include a mutual fund distributor and an investment advisor. If there is a difference between the two in terms of the roles they play while you invest, you should be aware of this.
Becoming an investor requires you to familiarise yourself with many aspects of the investment instrument itself, as well as the people related to your investment. For instance, if you are going in for a mutual fund investment, you should know certain things. The first thing to be aware of is that you do not have to open a demat account. When you go ahead with investment in mutual funds, you may come across a mutual fund distributor. A mutual fund distributor is an individual or a group responsible for facilitating the buying and selling of mutual funds. This individual or group will likely earn some amount as a commission for the selling of any given scheme. Put in plain terms, a mutual fund distributor has the task of assisting an investor in making decisions about investment. They may help investors by making offers of schemes that match unique investor needs and goals, after a review of an investor’s current assets.
In a way, the roles played by a mutual fund distributor and an investment advisor may be the same. Yet, there are some clear differences. An investment advisor is a broad term for an individual who acts as a consultant advisor for all investment decisions. Therefore, investment advisors are those who advise and guide investors about the best-matched investments to make, regarding investors’ risk appetite, time horizon, goals, etc. These may also be individuals as some banks have at their disposal, or groups, like AMCs (asset management companies). These investment advisors make an evaluation of any investor’s assets, liabilities, income, expenses, etc. and then assist in making decisions of what to invest in, be it an upcoming IPO, stocks, fixed income instruments, and more. They help an investor to make a concrete investment plan, and this is done for a fee, in most cases.
A mutual fund distributor can assist you in terms of the bounds of mutual funds. Their knowledge is limited and specific to what funds to invest in according to your needs and risk appetite. They can educate you about the types of funds available and potential returns. An investment advisor has a broad scope of knowledge and can give you advice and seasoned opinions on a gamut of investments in general, depending on your aims and requirements, making an individual plan just for you. This is more of a customised service.
The only way to invest wisely is to make informed choices and these must be based on your distinct goals and requirements. You may engage the help of any amount of advisors, but the final decision is yours to make. If you involve advisors in your investment process, it is wise to hear them out as you can get some good ideas, and then ask a lot of relevant questions to be clear about investment. Whether you have to open a demat account with a particular brokerage or invest in an upcoming IPO, there are various ways and means to invest. You can get it right if you do your own research as well.
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