8 Major Benefits of Investing in Mutual Funds

As we all know Mutual funds are currently the most popular vehicle for investment. But if you are a beginner and want to invest in mutual funds, here are some of the many benefits you need to know about Mutual Funds...

Diversification- Mutual funds can invest in dozens, hundreds, or even thousands of different investment securities within one portfolio. This involves the mixing of different types of investments and asset classes and is used to manage risk So, the fund manager always invests in more than one asset class (equities, debts, bonds etc.) It is called diversification. By investing in mutual funds, you get the immediate benefit without investing the large amounts of cash in different types of securities to create individual portfolios.

Professional Management-One of the primary reasons investing mutual funds is beneficial because they're professionally managed. Rather than analyzing, buying and selling stocks or bonds yourself, you have a skilled fund manager doing it for you. A fund manager deals with everything and settles on choices on how to manage your funds. He/she chooses whether to put your money , likewise settles on whether to hold them or not and for to what extent.

Systematic or one-time investment- You can design your mutual fund portfolio according to your financial limit and comfort. Systematic (monthly or quarterly) investments rather than lump sum speculations give you the advantage of rupee-cost averaging. For example, beginning a SIP (Systematic Investment Plan) on a month to month or quarterly premise suits financial specialists with less cash. Then again, on the off chance that you have surplus sum, go for a one-time lump sum investment.

Suits your financial objectives-There are a few kinds of mutual funds in India taking into account financial specialists from varying backgrounds. No matter what your salary is, you should make it a propensity to set aside some sum (anyway little) towards investment. It is anything but difficult to find a mutual fund that matches your pay, uses, investment objectives and risk appetite.

Quick & Easy Process-Putting together a portfolio of stocks and bonds can be difficult. You can start with one mutual fund and slowly diversify.The fund manager with the help of his team decides when and where to invest. In short, their job is to beat the benchmark and maximize the returns. One must be KYC Compliant for mutual fund investments. You can also choose whether you want to invest as Regular(through broker) or Direct(with AMC Directly).

Variety- Mutual Funds Comes in different Categories. You can invest in mutual funds that cover the main asset classes (stocks, bonds, cash) or you can invest into specialized areas, such as sector funds, thematic funds or precious metals funds.

Tax-efficiency- There are also some funds available which provides tax benefit. You can invest up to Rs. 1.5 lac in tax-saving mutual funds for 80C tax deductions. ELSS is an example for that. They have consistently delivered higher returns than other tax-saving instruments like FD in past years.

Safety- This is a myth that mutual funds are not as safe as bank products. As fund houses are strictly under the view of statutory government bodies like SEBI and AMFI. One can easily check the credentials of the fund houses and the fund manager from SEBI. They also have an grievance platform that work in the interest of investors.

GOOD LUCK, HAPPY INVESTING!!

RELATED POSTS:

What are Mutual Funds?

Fee and Charges involved in Mutual Funds

Types of Mutual Funds

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