At some point or the other, everyone realizes the importance of investments as investments help individuals fulfill their financial goals and objectives, and when it is about putting one’s hard-earned money somewhere, nobody wants to go wrong. When people start looking for options to invest money, Mutual Funds stands as a potential choice to them but a lot of people find it difficult to understand how it works and what are its main advantages. Most of the first time investors prefer consulting a Mutual Fund advisor in Mumbai or renowned experts from other cities to comprehend the process and choose the best schemes for themselves. In order to dive into the world of Mutual Fund investments, it is important that people can analyze and contemplate their financial situation, and, their financial needs and goals as well. Mutual Funds are investment instruments through which money is collected from various investors and then invested in other types of investments such as stocks, bonds, etc. This type of investment allows investors to diversify their investment portfolio and lets them add a substantial number of securities to their portfolio; which is highly cost-effective if compared to buying each security separately.
One of the biggest advantages of Mutual Funds is that there are a plethora of platforms now available online; this simplifies the entire process of investing and choosing schemes to a large extent. Investing in Mutual Funds through an online platform is said to be the smartest way to invest today. Everything gets completed within minutes via a few clicks, including the KYC.
Below is a list of five other important advantages that Mutual Funds offer to investors-
Mutual funds schemes offer liquidity to investors. Liquidity allows you to withdraw your investment money in times of need or in case of an emergency. Unlike other investment options like Real Estate, PPF, etc. it is easier to purchase and sell mutual fund schemes.
The best part about Mutual Funds is that you do not need to have a lot of money ready with you to commence your investment. There are SIP schemes available which start from amounts as low as Rs. 500. So in mutual funds, you will always have the flexibility of choosing a SIP scheme or investing a lump sum amount as well.
Mutual funds suffuse the collected money across a variety of investment vehicles which creates the diversification factor, as this procedure minimizes the effect a single security or a group of securities will have in the portfolio. The diversification lets you handle risks by investing in multiple asset classes as per your financial goals.
Mutual funds are highly beneficial when it comes to tax planning and tax-saving as well. One can get a deduction of up to Rs. 1.5 lacs under section 80. ELSS, also referred to as tax saving mutual funds, tend to deliver higher returns when compared to other instruments like FD, NPS, etc.
Usually, investors are devoid of the financial knowledge required to manage portfolios, in this case, fund managers or financial experts save your time and assist you with various activities like management, monitoring, asset selection, fund allocation, etc.