A mutual fund is a saving instrument in which pools money collected from investors are managed by some professional to buy securities. This fund scheme permit investors to diversified their funds in different-different of securities like exchange-traded funds, Sectoral Funds, Fixed Maturity Plans and many more. Investment in Mutual Funds is very easy and risk-free as compared to buying and selling individual bond and stocks on your own. Investors can sell their shares whenever they want to sell it.
Today Mutual funds play a vital role in household finances, mostly in retirement planning.
Why Should You Invest in Mutual Funds?
Mutual Funds are the best way of saving, it offers high returns without spending a lot of time and efforts on it. Instead of letting your money in a bank to grow, you have to invest in Mutual Fund because its generate fair inflation-adjusted returns. There are various reason to invest in Mutual Funds such as:
Mutual Funds Investments
Mutual fund investment diversify your amount across a large number of securities which minimize the risk of loss. By doing this you don’t need to worry about the variation of the individual securities.
2. Professionalism in management
In Mutual fund investment, a team of qualified managers continuously analyses the prospects and performance of the companies. They also suggest investors the suitable way to invest their money in securities so that they can get a profitable return on their investment. A mutual fund is a continuous process that takes time and proficiency which will add worth to your investment.
3. Tax benefits
Mutual Funds investments are also countable in tax relaxation. If you are investing in Mutual fund for a period of 12 months or more than then you can claim a tax deduction on your tax. But the capital gain will be taxed accordingly. Mutual funds also offer the benefits of indexation.
Mutual funds are the very affordable way of investing. For small traders and investors, it is not possible for them to buy high-cost shares. Mutual funds usually buy and sell shares in a large volume which allow small investors to buy shares according to their investments. The minimum cost of investment in Mutual funds is Rs.500, which encourage the smallest investor to get started on mutual funds
Mutual fund offers a liquidity that means with open-end funds, you can retrieve your all or small section of your investment at any time and take the current value of the shares.
Mutual fund investments allow their investors to buy and sell their funds in a short period of time without any much difference in the current market value. Also, In stocks and exchange-traded funds traders can trade at any time during market hours but in mutual funds, funding and transaction are only possible in a once per day after the fund’s NAV value is calculated.
6. Well regulated
Mutual Fund in India are regulated by the Securities and Exchange Board of India, which helps in providing transparency in the investment. In very six months, Sebi checks the portfolios of mutual funds to investigate whether the funds are investing in a proper way with its objectives or not.