I'm listening in every videos that compounding is magic. I know compounding is magic and it works like in Fixed deposit but how it works in shares or mutual fund.

Ans: Sachin
In simple words, compounding implies interest on interest. So technically even a savings bank account is cumulative if you let your interest earned remain there and then it earns interest later. However, it is not a long term investment avenue by any stretch of imagination.

I would recommend Mutual Funds (MFs) for you. If you're comfortable with equity, take Equity MFs. Or else take hybrid MFs. If you're not very sure of your ability to pick the right ones and make a proper portfolio and review it regularly, take the help of a good financial advisor for the same.

Ans: Mutual funds can be beneficial investment vehicles offering potential growth, diversification, and professional management. Here's a brief overview:

Benefits of Mutual Funds:

Diversification: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities, reducing individual risk.
Professional Management: Fund managers with expertise in financial markets actively manage the fund's investments to achieve optimal returns.
Liquidity: Mutual funds offer liquidity, allowing investors to buy or sell units on any business day at the fund's net asset value (NAV).
Accessibility: Mutual funds are accessible to investors with varying financial capacities, offering options for both lump-sum and systematic investment plans (SIPs).
Regulation: Mutual funds are regulated by SEBI in India, providing transparency and investor protection.
Risks and Considerations:

Market Risk: Mutual funds are subject to market fluctuations, and returns are not guaranteed. Investments can lose value depending on market conditions.
Fees and Expenses: Mutual funds charge management fees and other expenses, which can impact overall returns.
Risk Profile: Different types of mutual funds have varying levels of risk, depending on their investment objectives and asset allocation. Equity funds tend to be riskier than debt funds.
Lump Sum vs. SIP: Both lump-sum and SIP investments have their pros and cons. SIPs offer rupee-cost averaging and discipline, while lump-sum investments can capitalize on market opportunities but are subject to market timing risks.
Choosing a Fund:

Risk Tolerance: Assess your risk tolerance and investment goals before selecting a mutual fund. Equity funds offer higher growth potential but come with higher volatility, while debt funds provide stability but lower returns.
Diversification: Opt for diversified funds that spread investments across multiple sectors and securities to mitigate risk.
Past Performance: Review the historical performance of funds but remember that past performance is not indicative of future results.
Fund Manager: Evaluate the fund manager's track record and investment philosophy to ensure alignment with your investment objectives.
Overall, mutual funds can be an effective tool for wealth creation, but it's crucial to conduct thorough research, understand your risk tolerance, and consult with a financial advisor before investing.

Ans: Mutual funds can never guarantee to double your money within a specific period, they are subject to market fluctuations, their returns can vary depending on the type of fund, the underlying investments, and market conditions.