Ever since mutual funds were introduced, they have been one of the most popular investment options for investors all over the world.
If you’re an individual with sizeable savings and are looking to venture into the world of stock market investment, a high return mutual fund is your best option.
Here are 5 benefits of investing in mutual funds that are sure to persuade you to invest in mutual funds.
Offers You A Diverse Portfolio
Investing in different market commodities is one of the best ways to guarantee better returns. Investing a lot of money in a singular asset may leave you susceptible to certain risks that come with that particular investment. Imagine you are investing heavily in real estate or ESOPs, the returns may increase but it leaves you with a risk of failing too as the volatility of the market cannot be anticipated.
Instead, you should choose to invest in a diverse range of avenues like mutual funds for instance. Investing as low as Rs.1,000 or so a month can help you diversify your portfolio.
Liquidity Options
Mutual funds are usually liquid investments, which means your money is available to you anytime you want, unless the funds have a specified lock-in period. Also, these funds are very well integrated to your bank accounts and you can get hold of them in a few days time, in case you ever want to withdraw your investment.
Low Asset Management Costs
A typical mutual fund collects money from numerous investors. This also means that the cost of running a mutual fund is shared and divided between investments made by all the investors. This is why you get lower management costs in mutual funds, which are usually around 2.25 % of your initial investment or 1.5% to 2% of your yearly investment.
Extremely well regulated
Mutual funds in India are regulated by Securities and Exchange Board of India (SEBI), which enforces transparencyamongst mutual funds by getting corporations to disclose their portfolios at least twice a year. This helps you make a carefully thought-out decision and also determine whether the fund management company has been delivering according to what they had promised.
Easy Process
As long as you have a bank account and a PAN number, it’s extremely easy for you to invest in mutual funds. All that’s required of you is to attach your PAN number for a transaction of Rs.50, 000 or more with a signed cheque and your investment is done. Also, all top tier cities have various collection and distribution points, which makes it easy for you to collect and deposit your applications.
Investing in mutual funds is, no doubt, a great way to strengthen your financial portfolio and get better returns, but you need to be equally diligent because they do not guarantee a fixed return of interest on your investments. So, always make sure to read any and all the fund-related documents before investing.
Arwind Sharma a passionate writer on finance and closely associated with financial companies. He is still busy in discovering time-efficient finance schemes.