The Beauty of Mutual Fund Investment
A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates.
Am a Mutual fund investor for past 13 years, so here am sharing my experience in mutual fund and I would like to call it as “The Beauty Of Mutual Fund Investment”
- Risk Diversification
One of the most prominent advantages of investing in mutual funds is diversification. It is the process of spreading a given investment over multiple assets classes. diversification helps us reduce the risk associated with different asset classes Every stock is subject to three types of risk – company risk, sector risk and market risk. Mutual funds help investors diversify unsystematic risks by investing in a diversified portfolio of stocks across different sectors.
- Professional Management
A fund manager continuously monitors investments and adjusts the portfolio accordingly to meet its objectives. We called them professional. This professional management is one of the most important advantage of a mutual fund. Most of the investors do not have much time to research on it. But these professionals are the experts and they can understand the pulse of market than others.
- Easy Investment
It is very easy to invest in mutual funds, i.e. you can do this either online or offline. You can directly invest through the companies Mobile App ( eg ICICI Mutual Fund , HDFC Mutual Fund etc, ) also some other app like (Groww, Upstoke etc) offered the same, only you need to update your KYC. You can do it directly (online & Ofline) through Custodian company like Stock Holding Corporation Etc.
- Tax Benefits
To encourage investments in mutual funds, the Government of India offers several tax benefits. You need to confirm this before investing
- Easley Liquidate
Mutual fund investors can easily redeem their shares at any time, for the current net asset value (NAV) plus any redemption fees.
- Higher Return on Investment (RoI)
Mutual funds have greater prospects of potentially providing high returns over time as one can invest in a diverse range of sectors and industries.
All mutual funds are regulated by the capital markets watchdog Securities and Exchange Board of India (SEBI). This means that all mutual fund houses are required to follow the various mandates as laid down by SEBI. SEBI makes it mandatory for all mutual funds to disclose their portfolios every month.
- Variety of products
Mutual funds offer investors a variety of products to suit their risk profiles and investment objectives. Apart from equity funds, there are hybrid funds, debt funds, liquid funds and tax savings schemes etc. to suit different investment requirements.
Most of the mutual funds set a relatively low amount for initial investment and subsequent purchases. The SIPs (Systematic Investment Plans ) start at Rs 500 (PM) and Lump sum Rs 5000.