Benefits Of Investing In A Mutual Fund

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Professional Management
  • When you invest in a mutual fund, your money is managed by finance professionals.
  • Investors who do not have the time or skill to manage their own portfolio can invest in mutual funds.
  • By investing in mutual funds, you can gain the services of professional fund managers, which would otherwise be costly for an individual investor.
Diversification
  • Mutual funds provide the benefit of diversification across different sectors and companies.
  • Mutual funds widen investments across various industries and asset classes.
  • Thus, by investing in a mutual fund, you can gain from the benefits of diversification and asset allocation, without investing a large amount of money that would be required to build an individual portfolio.
Liquidity
  • Mutual funds are usually very liquid investments
  • Unless they have a pre-specified lock-in period, your money is available to you anytime you want subject to exit load if any.
  • Normally funds take a couple of days for returning your money to you.
  • Since they are well integrated with the banking system, most funds can transfer the money directly to your bank account.
Flexibility
  • Investors can benefit from the convenience and flexibility offered by mutual funds to invest in a wide range of schemes.
  • The option of systematic (at regular intervals) investment and withdrawal are also offered to investors in most open-ended schemes.
  • Depending on one’s inclinations and convenience one can invest or withdraw funds.
Low transaction cost
  • Due to economies of scale, mutual funds pay lower transaction costs. The benefits are passed on to mutual fund investors.
  • which may not be enjoyed by an individual who enters the market directly.
Transparency
Funds provide investors with updated information pertaining to the markets and schemes through factsheets, offer documents, annual reports etc.
Well regulated
  • Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which endeavors to protect the interests of investors.
  • All funds are registered with SEBI and complete transparency is enforced. Mutual funds are required to provide investors with standard information about their investments.
in addition to other disclosures like specific investments made by the scheme and the quantity of investment in each asset class.
Tax benefits
Mutual funds offer the option to invest in them and claim income tax benefits under section 80C of the IT Act. This means that the money invested in mutual funds is exempt from income tax and helps bring the taxable income down. 
Affordability. Most mutual funds set a relatively low dollar amount for initial investment and subsequent purchases.
 Costs
Mutual funds are one of the best investment options considering the costs involved. If you hire a portfolio management service, you’ll typically be charged 2% to 3% of the total investment per year. They will also deduct a share from your profit.
Mutual funds are relatively cheaper and deduct only 1% to 2% of the expense ratio. Debt mutual funds usually deduct even lesser. 

Comments

  1. SS18 December 2019 at 02:48

    Thanks for sharing this mutual fund investment benefits :) This post can surely help for those who are interested to invest in best mutual funds in India.

    ReplyDelete

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