Mutual Funds - Why to Choose This Smart Investment Technique?

Mutual funds have been adapted by a majority of successful investors throughout the world who have invested roughly US$ 41 million in their favourite schemes. In recent years, India is emerging at a great pace and mutual funds’ asset under management has risen from US$ 17.5 trillion in FY2017 to US$ 22.1 trillion in FY2018. What is the reason behind this growth of mutual funds? Not just in India, but throughout the world more and more people are enhancing their investment strategy.

The answer is simple; it has a plethora of advantages over other investment strategies. Still confused, why mutual funds are a better option? Let’s discuss each advantage of MF in detail.

Professional Investment Management

Mutual funds are manged by professionals who are highly experienced and educated for particularly managing the corpus using the most beneficial instrument for the growth of investors’ money. The investors need not worry about managing their investments regularly and keeping an eye on the market volatility. In today’s world, where time is very expensive, investors can save a lot of time and effort by investing in mutual funds.

Higher Returns

Returns are what an individual is most concerned about before investing in any of the money-market instruments. For investors who seek safety first, can have a variety of debt funds according to their needs which can provide a much better return as compared to bank FDs. For those who like adventure, there are equity mutual funds, in which the margin of growth can be as high as 25-30% which is the highest return offered by any means of investment. For those who want to float their boat in the middle of risk and returns, hybrid mutual funds are available, which are a mixture of debt and equity schemes.

Convenience and Flexibility

Through mutual funds, you can enjoy the benefit of investing in multiple instruments only by investing in one mutual fund as they have diversified portfolio and a wide range of services. Fund managers decide what securities to trade, collect the interest payments, and see that your dividends on portfolio securities are received proportionally.

Diversification

Suppose you buy some stocks of a particular company with all your savings and that company suffers a huge loss. As a result, you will lose all your saving. In mutual funds, a corpus is invested in a broad range of securities hence the risk of loss gets minimized. Even if one stock falls down, the others will keep generating better returns and the loss will thus be neutralized.

Low Cost

You can buy mutual funds with a small amount as low as Rs 1000 and take each and every benefit of investment which is generally not allowed in other investment methods.

No Lock-In

There is no lock-in period in any of the mutual funds except for ELSS. Which means you can withdraw your money whenever you want to or whenever you need to. You don’t have to rely on anyone else for your emergencies; you can help yourself by investing in mutual funds.

Transparency

You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme.

Saving is the most important aspect of life. Your investment choice can significantly impact the rate at which your money compounds. With the advancement in technology, investing in mutual funds has become a cakewalk. The whole process is offered online by many players in the industry. So be smart, stay updated, and save better with mutual funds.

Dishika is well-versed with the ups and downs of the financial market and has published articles on mutual fund and SIP. She is associated with MySIPonline.com, which is an AMFI registered mutual fund company.