Why do not Mutual Funds give a fixed rate of return like a saving account or FD?

Mutual funds do not give a fixed rate of return like a savings account or fixed deposit (FD) because they are investment vehicles that invest in various financial instruments, such as stocks, bonds, and other securities. The returns from these investments are subject to market fluctuations and the performance of the underlying assets. As a result, the returns generated by mutual funds can vary greatly from one period to another.

Unlike savings accounts or FDs, mutual funds are not guaranteed by the government or any other entity. Therefore, there is always some risk involved in investing in mutual funds. However, mutual funds do offer the potential for higher returns than traditional savings accounts or FDs, which typically have lower returns but are considered safer investments.

Mutual funds are typically managed by professional fund managers who analyze market trends and invest in a diversified portfolio of assets to achieve a specific investment objective. The returns generated by the mutual fund are then distributed among the investors in the fund based on their share of the total assets.

In summary, mutual funds do not offer a fixed rate of return because they are investment vehicles that are subject to market fluctuations and the performance of the underlying assets. While they do offer the potential for higher returns than traditional savings accounts or FDs, they also carry a higher level of risk.