Directory Image
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Privacy Policy.

Mutual Funds- A Popular Investment Option

Author: Chinmay T Barot
by Chinmay T Barot
Posted: Dec 28, 2020

People invest to achieve financial goals and live a desired lifestyle. Mutual funds can be best suited as it is the simplest, most viable investment option, and directs you to be a successful investor. In a nutshell, mutual funds investment is a basket of investments holding stocks, bonds, other securities collected for investors.

A person buying a mutual fund is not only investing your money but also buying partial ownership of the mutual fund company and its assets. Investors, typically earn returns in three ways:

  • Net income.
  • Capital gain from the sold securities.
  • Selling of mutual fund shares for a profit in the market.

While investing in any mutual funds you must consider these key aspects:

  • Financial goals for which you want to invest
  • Risk tolerance
  • Liquidity of your investment
  • Investment strategy
  • Performance of funds
  • Taxes

Selecting from top-performing mutual funds is a crucial task with so many options available in the market. Hence keeping in mind the above key factors will help you invest in the right mutual funds to achieve your financial goals.

Benefits of investing in an efficient mutual fund

  • Diversification- One of the greatest advantages is mutual funds come in the most diversified manner. It has various types of investment options such as stocks, bonds, equity, debt, and more which allows you to have a diversified portfolio.
  • Easily accessible- Mutual funds are the most feasible way to handle your investment as buying and selling of stocks is relatively easy. Low cost and easy to use makes it most accessible.
  • Professional Management- Your investment is professionally handled by well-versed management. The professional managers work with all the research and analyzing current scenarios of the mutual fund investments.
  • Automatic Reinvestment- Mutual funds help the investor’s investment grow as there are dividends, capital gains, and other income sources. You not only earn returns on your investment with on your earnings as well.
  • Liquidity- One of the beneficiary features of a mutual fund is its liquidity. Investors can redeem the cost at any point in time as it allows flexible withdrawal, unlike other investment options.
  • Systematic Investing Plan (SIP)- Significant advantage of investing in mutual funds is that the investor can invest in small amounts through the SIP. The SIP is as frequent as monthly, quarterly, or as per the investor’s comfort.
  • Tax-efficient- A mutual fund investment also provides tax-saving benefits for the investor. In India, as per the Income Tax Act, a mutual fund investor is allowed to have tax deduction benefits up to the amount of Rs.1,5000. In that way, such investment can bring down investor’s taxable income.

According to the Association of Mutual Funds In India ( AMFI), Assets Under Management (AUM) of India mutual fund industry as of November 30, 2020, has crossed 20 lakh crore and stood at Rs.30,00904 crore.

With numerous options of investment in the market, mutual funds can offer a simple and efficient way of investment for the future of investors.

About the Author

Going a way to make a world beautiful place.

Rate this Article
Leave a Comment
Author Thumbnail
I Agree:
Comment 
Pictures
Author: Chinmay T Barot

Chinmay T Barot

Member since: Sep 29, 2020
Published articles: 23

Related Articles