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What are the advantages of investing in mutual funds?

Various types of mutual funds are available to meet the needs of investors—from conservative to aggressive

May 09, 2012 4:37 IST | India Infoline News Service

A mutual fund is a type of professionally-managed collective investment scheme that invests money from many investors to buy securities.

There are many advantages of investing in mutual funds. Investing in a mutual fund doesn’t require a large sum of money. Investors can invest in mutual funds with very little cash. For example:they can start investing in funds by Rs. 5,000. These funds enable investors to diversify their investments with this small amount. Various types of mutual funds are available to meet the needs of investors—from conservative to aggressive.It is vital for investors to identify which fund suits their requirements best and invest accordingly.

Mutual funds are managed by educated and professional fund managers with the objective to deliver consistent returns while controlling risk. At very low cost, mutual funds offer investors an option to diversify their investment across various asset classes such as debt,equity and liquid among others.

Mutual funds can be easily redeemed at their existing redemption price for which they are quoted on daily basis and converted into cash. Also, money can directly be credited to the investors’ bank account.

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