6 Advantages of mutual fund investment

Today, people have a plethora of options to invest their hard-earned money for good returns, including bonds, money market securities, shares, etc.

Jun 22, 2016 12:06 IST India Infoline News Service

Today, people have a plethora of options to invest their hard-earned money for good returns, including bonds, money market securities, shares, etc. and, each investment option comes with its own set of benefits and challenges. Many investors prefer to invest in mutual funds over others to achieve their financial goals.

Investors pool their money through mutual funds for a diversified selection of securities, handled by professional fund managers. It gives an array of innovative products like exchange-traded funds, fund of funds, sectoral funds, fixed maturity plans, etc. This financial instrument offers convenience to its investors along with below mentioned investment benefits:

  • Beat inflation

Mutual fund proves as an ideal investment option to place your savings for a long-term inflation adjusted growth and the buying power of your money does not plummet over the years.

  • Expert fund managers

Supported by a dedicated research team, investors are offered with the services of an experienced fund managers who manage the financial decisions based on the performance to meet the objectives of the mutual fund plan. They have real-time access to crucial market information and are able to execute trades on the most cost-effective scale.

  • Diversification

Mutual fund schemes help mitigate risks to a large extent by distributing investments done by investors across a diverse range of assets. It is advisable for investors with a limited investment capital to grab this investment opportunity.

  • Liquidity

If you invest money in open-ended schemes based on its net asset value (NAV), then you can have the benefit of getting your money back promptly. It can be traded in the stock exchange if your investment is close-ended. It has a stipulated maturity period of around five to seven years.

  • Low cost

Low investment cost is the biggest advantage for any investor because direct investment in capital market costs really expensive. Mutual funds are relatively affordable. You can start with as low as Rs. 500 and receive the benefits of long term equity benefits.

  • Transparency & safety

The Securities and Exchange Board of India (SEBI) regulates every mutual fund, it means your investment is managed in a disciplined manner and are in safe hands.

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