Benefits of Mutual Funds

26 July 2021

Mutual Funds are one of the most commonly known investments in the Indian market. A large number of Indian households have their money invested in these funds and for all the good reasons. A Mutual Fund is a professionally managed fund that gathers money from many investors to invest in shares & bonds.

Let me quickly explain to you in simple words how it all works. A fund is started usually by an institution. These institutions appoint the most experienced financial market experts, and then several retail and institutional investors invest in the fund based on its credibility. The most important responsibility the experts have is, making sure the money gathered from the people is invested in the best securities possible. They invest in the best securities in the market, based on the type of mutual fund. The value of which is decided by dividing the number of shares by the amount of money invested in it. Thus, whenever the investor wishes, he can sell his share in the mutual fund and enjoy the profit.

In today's market, there are several benefits of mutual funds and in this article, let's talk about a few of them.

Diversification

Mutual funds are the best way to diversify your investments. There are several financial market experts that are dedicated to the funds you invest in. They make sure the fund is diversified in the best way and the best securities. The diversification of your investment assists enormously in mitigating risks and also enhances the possibility of profits. The best mutual funds are the ones with good returns with the least risk. An efficiently diversified fund will always be fruitful in the long term.

Liquidity

One of the most notable benefits of mutual funds is liquidity. There are several investments in the financial market, but most of them are either highly risky or highly illiquid. Mutual funds are where it all comes together. You can pull out (redeem) your investments from the fund anytime you feel the need to and invest any time as well. In fact, now there are also funds that provide an instant redemption facility, under which the money is transferred into your bank account t the very day you redeem it. However, in some cases, the exit load can be levied.

A Hassle-Free Investment

With MFONLINE, Mutual funds become a very simple investment. With the right advice and assistance, you can easily invest in mutual funds without any unnecessary hassle. All you have to do is register yourself on the website, and the executives will take care of the rest for you.

Expert Management

Every mutual fund is managed by a group of professional financial experts. They have a keen understanding of the securities and financial markets that the fund is invested in. The experts constantly monitor the markets for you and keep an eye on every movement in the market, making sure your risk is minimum and the profit is maximum. One of the most crucial benefits of mutual funds is the fact that they are constantly managed by these experts.

Regulated

Mutual funds are well regulated under the SEBI guidelines. They are constantly monitored by SEBI to make sure the mutual fund houses are following their guidelines. The mutual fund houses are also required to disclose their portfolios each month to ensure 100% transparency.

Options of Investment

Under mutual funds, you have different options to invest. For example, you can invest a lump-sum amount and wait for it to grow over a period of time. Or you can invest small amounts every month in the form of SIP. SIPs means systematic investment plans. These investments are a pretty good idea because they average your investment over a period of time and even help in averaging out losses. For some of the Best Mutual Funds for SIP, read this blog.

Tax Benefits

Mutual funds provide several tax benefits based on the type of investment. For instance, under Equity Linked Saving schemes, you can save up to 1.5 lakhs every year. Several investors are attracted to this investment specifically because of the tax benefits. These schemes have three year lock-in periods.

Low lock-in periods

Mutual funds have very low lock-in periods if any. The highest lock-in period for a mutual fund is three years, much less than other low-risk funds such as FDs, ULIPs, et cetera. However, there are also funds that have absolutely no lock-in periods. These funds are called Overnite funds, which are specially created for increased liquidity.

These are the top benefits of mutual funds in 2021; for the best advice and ideas regarding best investment you can always contact the experts at MFonline.

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.