5 Reasons Why You Should Invest in Mutual Funds

Investment

Today the market is a spenders market. Gone are the days when people used to save pennies and dimes to make their humble abode. Today you want to have a good life with what you earn. But the significance of saving has not lost on you and therefore you are constantly on the lookout for strong investment options that provide good returns instead of limiting yourself to low-interest term deposits.

Why invest in Mutual Funds at all?

With a higher rate of returns comes the possibility of high risks. Understanding this predicament many institutions including banks and NBFCs have come up with attractive Mutual Funds schemes that help you generate good returns on your investments while minimising the risk.

Risk management is not the only reason to opt for mutual funds; here are 5 main reasons that make Mutual Funds the go to option.

Systematic and Disciplined Investment

Mutual funds help you make investment and savings a habit and what could be better than to invest in a good habit? The Systematic Investment Plan that most institutions offer allows you to invest as much as Rs. 1000 a month, which makes it easy for individuals to start investing early. Also, investing on a regular basis helps you instill a productive practice towards securing your future.

Moreover, such a practice allows you to indulge in dinners and outings with your family more peacefully.

Liquidity

The most important function of your Mutual Fund is that it is a liquid asset. Most funds today have no lock-in period which means that you can withdraw your invested amount or part of it anytime you choose.

Although there are certain funds, for instance, the Equity Linked Saving Schemes (ELSS) that has a lock in period of a minimum of 3 years. But on the upside, these investment funds allow tax deductions/savings for the amount invested during a year. These have a double benefit for the investor as they provide good returns plus the advantage of tax management.

Investment options

Through a single mutual fund, you can invest in multiple equities of different companies. Also, equity is not the only option. With the help of your fund, you can benefit from all the commercial markets including debt, equity, and commodities. In the case of no lock-ins, you can choose the period for which you want to invest. There are also schemes that allow you to top up on your monthly investment amount where by you can take advantage of the additional income to cash on market fluctuations.

Diversified portfolio

The age old saying of ‘Not putting your eggs in one basket’ is a philosophy adopted by all institutions that have floated such funds. Through a single fund, you will have the option to take advantage of the performance of different sectors. You can invest in different classes of stocks. These diversified investment options help balance out your risks.

Investment at your fingertips

Investing a mutual fund of your choice has become as easy as shopping online. The entire process of has been made online. Even the KYC verification happens at your door step. Investing is just a matter of clicks away. You can buy and sell your funds in a matter of minutes. This not only makes the process convenient but also lets you take advantage of the market fluctuations and skim off profits.

Being market linked and the diverse options that the funds provide these investment vehicles have become the best route for compounding your money. Sources have revealed that over the last decade equity funds have delivered as much as 11%-15% returns on investment.

In case you are still worried about the margin of risk, debts funds can offer you stable returns with flexibility as compared to your regular bank deposits.