Mutual fund a boon Investment tools or just fuss??
First we will start with what is Mutual Fund? A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities i.e equity, Bonds, Debentures etc.
Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The primary advantages of mutual funds are that they provide economies of scale, a higher level of diversification, they provide liquidity, and they are managed by professional investors. On the negative side, investors in a mutual fund must pay various fees and expenses.
Five Major benefits what makes Mutual Fund Investment a boon not Fuss.
- Investor can start with no age limit and with Minimum investment of as low as Rs 500 in SIP(Systematic Investment Plan).Minimum capital requirement and systematic investment will grow your wealth in long term.
- Investing in stock market requires a lot of experience and expertise, Mutual funds are managed by professional fund managers who have sufficient expertise and experience in picking the right stocks to get the best risk adjusted returns.
- Share prices are highly volatile and can induce the investor to buy or sell in short time periods due to fear or greed. Systematic investment plans in mutual funds help investors to maintain a disciplined approach to savings and investment.
- Mutual funds also offer investors flexibility in terms of modes of investment and withdrawal. Investors can opt for different investment modes like lump sum, systematic investment plans, systematic transfer plans, systematic withdrawal plans, switches from one scheme to another etc.
- Mutual funds are regulated to very high standards by SEBI. They are run by professional managers, and subject to a great deal of scrutiny and compliance. They will typically invest only in companies that are listed on major stock exchanges, which are also regulated by SEBI. Investments stay in your name at all time, and all money transfers back and forth are through official banking channels. When you invest in a mutual fund, there is next to zero chance of falling victim to a fraud (unlike chit funds, pyramid investment schemes and other shady investment operators).