Caselet 1

Q. Explain the reasons for Mutual Funds being and attractive investment option for retail investors.

Q. “without proper financial planning the future can be a miserable struggle to meet these
demands”. In this context explain the need for financial planning.

Q. Explain the relationship between financial planning and mutual funds

Personal financial discipline demands every individual to plan for expenditure and savings against
current income. While moving up the hierarchy of needs, one must simultaneously save money for
future. As one goes on in life the standard of living sizes needs increase and expenditure to meet
those needs also increases. Without proper financial planning the future can be a miserable struggle
to meet these demands. “You don't want to see yourself in a position where you won’t to be able to
buy your dream house, can't go on that Cruise or can’t pay your children's education fees”.

This sums up and individual’s investment needs. Investment is the best option to meet the need and
value for money in the future because it uses money saved today to earn more for tomorrow.
Several investment options are available today- bank deposits, corporate bonds, gold, real estate,
stocks etc. Mutual fund is an investment option that has become very attractive for retail investors
who are interested in the financial markets but do not have the time, expertise and experience in
good stock picking. Problems faced by the small investors in the share market have been offset by
the emergence of Mutual Funds