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Money Matters

What are the advantages of investing in Mutual Funds

Mutual fund investments are the perfect way to increase your wealth without substantial risks. Mutual funds offer enhanced inflation-adjusted returns within a short span of time due to its market linked characteristics. Being managed by professionals and experts, they are one of the safest ways of investing money in the stock markets. Although mutual funds involve certain risks, skilful management and strategic selection of securities by fund managers will reduce the risk significantly. It is a great investment scheme through which you can achieve capital appreciation over a period of time. Here are a few more reasons that make mutual funds a viable investment option:-

  • Diversification of Risk:- The thumb rule of investing has always been asset diversification. Mutual funds facilitate diversification of investment by mixing different types of stocks within a single portfolio. This lowers the risk of losses by spreading the money across various industries. If a few stocks decline in value, the other well performing stocks will compensate for the loss.

  • Professional Management: - Mutual fund accounts are managed by qualified professionals. These professionals invest only after careful analysis of the performance and prospects of different companies. It is a continuous practice that takes time and proficiency which enhances the value of your investment. This places mutual funds in a much better position to get higher returns on investment.

  • Transparency: - The performance of mutual funds are monitored by various publications and rating agencies. This makes it easy for investors to compare different funds before investing. A mutual fund holder will be provided with frequent updates about the NAVs rates as well as information regarding fund's performance and the fund manager's investment strategy. Furthermore, every mutual fund investment is regulated by SEBI, hence you can be assured about the safety of your investment.

  • High Liquidity: - Mutual funds generally have better liquidity in comparison of other securities. Unless your mutual fund has a pre-specified lock-in period, the units can be redeemed any time. Moreover, the money can be sent directly to your bank account easily after redemption.

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