REASONS TO INVEST IN MUTUAL FUNDS

It doesn’t matter whether you are having an IQ of a genius or you are an average person. You can invest in mutual funds and earn great returns on your investments.

In simple words, Mutual funds are collection of stocks/bonds. The mutual fund’s manager takes your investment amount and further invests in stock or bonds that have the potential of giving good returns in the future. Investing in mutual funds is much more convenient than directly investing in stocks for a beginner.

7 Reasons To Invest In Mutual Funds:

TAX EFFICIENCY

A mutual fund is the best investment option to save tax. As in India taxes are exempted for a long term capital gain i.e. investment a having holding period of over a year. ELSS Mutual Funds provides a tax exemption of up to Rs. 1.5 lakh a year under section 80C of the Income Tax Act.

HIGHER RETURNS

Long term investors are more like to invest in this platform to get the best returns without any risk. No bank FD can provide this much returns. The mutual fund keeps your money away from inflation. Be it a marriage or a retirement plan mutual funds have the potential to cater to every goal of yours with a good return and lesser risk as compared to stocks. You can get on an avg of 15% return per year return easily.

EASY TO GET STARTED WITH

You can start investing in mutual funds with as small as Rs. 100 as there are many. You can increase your investments every month by opting for SIP (most worthy investment option for a middle-class person). So it is viable for all kinds of people to invest in mutual funds.

Risk Free & Time Saving

If you invest in Good Mutual Funds then you don’t need to worry about your money. They will definitely increase. But if you invest directly in the stock market then you have a big chance to lose money if you are not able to find good stock. Also, you don’t need to give time to check your portfolio or about your stock news, results, etc.

HIGHER LIQUIDITY

Another reason to invest in mutual funds is that you can enter and exit it easily. Other investment opportunities like property, fixed deposits, etc don’t offer this ease. Factors like penalty load should be considered in Mutual Funds.

DIVERSIFICATION

Diversification is the priority of all kinds of investors. It reduces the risk involved in building a portfolio. A diversified portfolio may not rise or fall in a sudden as its performance depends on various sectors.

Consider a situation where a company’s financial performance is poor, the stock price may fall, even if the market rises.

In other situations, even if the company performs well, the stock price may still turn down, if the market declines.

A mutual fund offers you less risk in comparison to stocks along with good returns as it is not dependent on a particular stock or sector.

PROFESSIONAL MANAGEMENT

You don’t need to be an expert to gain returns as in the case of stocks. As your investment is undertaken by a professional manager who is having enough knowledge and experience to study and analyze the market.

The expert monitors on timely exit and entry and takes care of all the challenges. Investors like you and I are only supposed to invest and be least confident that rest will be taken care of by the expert manger. With the introduction of SEBI guidelines, there are no chances of malfunctioning, it offers complete transparency.

LOWER COST

Some investors do think that mutual funds are invested in stocks. So why not to invest in stocks directly through a broker, instead of investing in mutual funds?

But the reality is that mutual funds lower the cost of investing. Since mutual fund managers buy and sell stocks in large volumes as large no. of people invest in it. Transaction costs on a per-unit basis are much lower than what individual investors need to pay if they buy or sell shares through stockbrokers.

Conclusion

Mutual funds are no doubt the best investment option for beginners or those who don’t have much time but want to earn a good return from the market. But to find a good Mutual Fund is little bit tough. So if you want to know about some best funds dm us on our social media platforms.

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