Are mutual funds good area to invest. If yes what are the risks and benefits?

The advantages of mutual funds:

some funds specialize in areas that the average investor would have a difficult time investing in, such as stocks of foreign countries and stocks of small cap companies for example.

mutual funds allow for diversification without having to buy a bucket of stocks.

easy to purchase and sell for the small investor.

disadvantages:

70% of mutual funds under perform the market in general. Not a great record.

many mutual funds are bloated. It is difficult to invest a billion dollars.

mutual funds have to declare and pay capital gains once a year on which one will have to pay taxes. If you buy and hold a sound quality stock, that is not the case.

Depends what's inside the fund! If it's shares, then the value will fluctuate with the shares markets. If Bonds, your capital will be much more secure. You need to read up on investments or talk to an investment expert.

Yes, if your investment horizon is monimum 5 years and your risk appetite is low. Over a long term, mutual fund investments give decent returns, more than what your bank deposits would do. And they are tax free too.

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Ummmm...I see some good advice...but one glaring error. Mutual funds are NOT tax free unless they are tax exempt bond mutual funds. Mutual funds that are balanced or consist of stocks absolutely are taxable. And, regardless of the vehicle...capital gains are ALWAYS taxable. If you happen to buy the fund inside of a 401/k or IRA or something...then yes, it is tax deferred. But keep in mind the fact that most mutual funds absolutely are taxable.

1) Yes.
2) You could lose money.
3) You could make a lot more money than 4.65%

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