10 REASONS WHY YOU SHOULD INVEST IN MUTUAL FUNDS?
Although there are many reasons why you must invest in Mutual Funds. Here are 10 reasons why mutual Funds can be a good investment choice for you and why you should consider investing in Mutual Funds –
Diversification is believed to be one of the most important aspects of investing. But how investing in mutual funds can help you diversify your investment portfolio? The advantage of a large-cap mutual fund is that you can diversify your portfolio with just one or two mutual fund schemes. When you buy a mutual fund, you can procure instant access to hundreds of individual stocks or bonds.
You can also read: THE POWER OF DIVERSIFICATION
Investing in a stock requires a lot of research and study of the company you want to invest in. Many investors don’t have the resources, time, or experience to buy individual stocks. On contrary, mutual fund managers and analysts dedicate their professional lives to research and analyze current and potential holdings for mutual funds. This not only adds expertise but also versatility and convenience to your investing experience.
A mutual fund comes in vast variety and styles including stock funds, bond funds, sector funds i.e. industry focused, target-date mutual funds, money market mutual funds and balanced funds.
Investing in mutual funds allow you to build a diversified portfolio at minimum cost and with ease and convenience.
You can also read: THE PRO’S OF MUTUAL FUNDS
START WITH LOW MINIMUM
The mutual fund gives you an opportunity to start investing with the low minimum.
SYSTEMATIC INVESTMENT PLANS & WITHDRAWALS
Mutual funds give you an opportunity to invest with discipline and regularly with SIPs (Systematic Investment Plans). There are mutual fund schemes that allow you to invest as little as Rs.500/- per month. Money can be directly deposited to your mutual fund account from you saving bank account without any hassle. On contrary, money can be withdrawn as and when required from your mutual fund account and can be deposited into your bank account with ease.
You can easily and conveniently get your dividends reinvested into your mutual funds with any extra fees or load. This adds the benefit of compounding to your investment portfolio and ensures capital gains.
Mutual fund performance holdings are publicly available to ensure that investors are getting what they pay for. All the essential information can be found in the mutual fund prospectus or the company’s website. The investor can also find the details of their underlying securities that his mutual fund portfolio holds.
The liquid asset is a category of mutual fund, which invests primarily in money market instruments. Mutual Funds allow liquidity of your funds easily. You can get cash from most mutual funds just within a few days of request submission.
AUDITED TRACK RECORD
A mutual fund company maintains performance track records for each mutual fund and audit them for accuracy. Hence, investors can trust the mutual fund’s stated returns.
SAFETY OF INVESTING IN MUTUAL FUNDS
Mutual funds are subject to market risk. This can (and often do) fluctuate the value of mutual funds. Hence, at times, an investor can end up with less money or returns than expected. However, it is this market risk that also enables investors the opportunity to grow their wealth over long-term. In this context “safety” is a relative term.
Well, if you’re looking for the guaranteed safety of principal amount that has been initially invested, mutual funds may not be the best choice for you.