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9 Benefits Of Investing Mutual Funds In India
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Mutual funds are a pool of funds which are collected by different investors that invest in assets like stocks and bonds. A Mutual fund is managed by asset management companies, every AMC has several fund schemes. Investing in mutual fund is considered to be one of the easiest ways to increase wealth.
9 benefits of investing in mutual funds are:
Liquidity: An open-ended mutual fund is highly liquid, and the units in these funds are generally easy to purchase and are equally easy to exit from the scheme. However, a lot of these funds charge an exit load at time an investor sells the units of the scheme.
Diversification: Market movements determine the performance of mutual funds and the risks which are associated with them. Investments are generally made in multiple asset classes like money market securities, equities and debt instruments so the risk will be evenly spread out. This step ensures that when one asset class performs poorly, the returns can be generated from the other classes and compensate for the losses.
Low cost for bulk purchases: If an investor decides to purchase a high number of mutual fund units, the total cost will be low, since there will be low commission charges and processing fees.
Easy investment process: Investment in a mutual fund is an easy process, all an individual has to do is identify their financial goals and decide how much money would they want to invest to achieve them and a fund manager will take care of them.
Safety: Investing in mutual fund is a safe and secure way of generating capital. When an investor assesses the fund house from where they have purchased the units of mutual funds in addition to the assessment of fund manager, their capital will be safe.
Managed by professionals: Mutual fund is managed by financial experts and advisors and, as these experts have the correct knowledge and expertise an investor will be guaranteed great returns. Investors require minimal knowledge about mutual funds for investing in them. Fund managers will do all the work on behalf of the investors and make the decisions regarding the kind of funds they want to invest in.
Helpful for meeting financial goals: An investor will have great access to a wide variety of mutual fund and can be ideal for investors for meeting financial goals. Irrespective of how much money an investor makes, investors can find funds to invest in on a monthly basis through SIPs and raise funds for future use.
Systematic investment plans: The average transnational costs which an individual incurs are low if they choose SIPs for making investments in mutual funds. SIPs are also great options as a lot of people may not have a lump sum amount to invest in a mutual fund. If an individual earns a monthly salary, they can set aside a certain amount every month and it will be invested in mutual funds. SIPs also help an investor by benefiting from the market’s highs and lows.
Automated payments: In a systematic investment plan, an individual can opt for automated payments, wherein a pre-determined amount will be debited from the investors account automatically, so an investor will not need to worry about sending the money every month.
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