Some of the key benefits of Investing in mutual funds can be low cost, diversification and easy to invest. However, some points to understand why mutual funds are beneficial to investors for creating long term value of the portfolio and achieving the financial goals. If you are a beginner to investing in mutual fund some key points to know and if you are seasoned investor some points to brush up your information on mutual funds
Here are the 8 top benefits of investing in a mutual fund.
1. Simplicity: Easy to Understand
Mutual funds are very simple investment products and beginners too can understand mutual funds. Mutual funds can be considered a basket of investment. Each basket consists of stocks and bonds Therefore, an investor who buys mutual funds basically buys the whole basket. Simple!
2. Accessibility: Mutual Funds are easy to buy.
Mutual funds are offered by any stockbrokers, Mutual fund distributor, banks, wealth management companies and online. It's very easy to access mutual funds.
3. Diversification: Mutual funds have broad market exposure
One mutual fund scheme can invest in a variety of securities in a single fund option. However, it is advisable to invest in different such schemes.
4. Variety: Mutual funds come in different categories and types.
Mutual funds offer a wide variety of choices. You can choose them basis you Risk appetite, financial goals, and time horizon. You get to invest in various asset categories like Equity or Debt funds. Further sub-categories into sector funds or metal funds and categories basis market cap large, mid and small cap funds.
5. Affordability – Mutual Funds have minimum lows
Most of the mutual funds have minimum investment requirements as low as Rs 5000 and also one can participate through Systematic Investment Plan (SIP) starting as low as Rs 1000.
6. Low Expense - Mutual funds cost less to manage your portfolio
Cost of the percentage of Investment is low in actively managed funds when compared to an actively managed portfolio of individual securities.
7. Professional Management – Mutual funds are managed and analyzed Professionally !!!
The biggest advantage of investing in mutual funds is that the funds are being professionally managed and analyzed by the fund's managers who have the skill, desire, and patience required to do the job well. Mutual funds enable investors to do more things in life rather worry about investment matters.
8. Flexibility: Mutual funds have several uses and applications
All the above benefits cover the flexibility provided by mutual funds. You can Invest in just one fund or different funds. Investment can be done through Lumpsum or SIP( Systematic Investment Plan), In growth option or dividend options, Equity or Debt Funds, and limitless investment strategies making it suitable for both beginners and seasoned investors.
Bottom Line -
Although investment in a mutual fund is suitable for all type of investors and simple to invest, investors should be careful before making an investment in mutual funds as the investment is subject to market risk and investors should choose right fund aligned towards their goal and risk tolerance.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.
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