Why Invest in Mutual Funds?

Is your money resting somewhere at home or lying in your bank accounts that give you just 4% interest? Why not invest your hard-earned money to make it work hard to earn you some more money?

In an age like today, when there is so much commercialization that there isn’t anything like ‘enough money’, you should definitely think of saving and growing your money through well planned, smart investments. Also, the earlier you start the more benefits you get and by the time you retire, you would already have created a second source of income for years to come.

So, how to invest money? Some traditional ways include peer to peer lending, investing in precious metals like gold, investing in property, etc. Many people also buy LICs and invest money in FDs (fixed deposits) and RDs (recurring deposits). But here we are going to talk mainly about investing in Mutual Funds.

What are Mutual Funds?

A mutual fund is like a pool of money from numerous different investors who wish to save or make more money just like you. Investing in mutual funds is a lot easier that directly buying and selling stocks or bonds. With mutual funds, it gets easier to sell your shares whenever you want. So, why should you invest in Mutual Funds?

Benefits of Investing in Mutual Funds:

Get Your Money Managed by Professionals

Qualified professionals manage your money along with their research team that constantly analyses the performance of different companies. Fund managers are better equipped to manage your investments and to help you get higher returns. The mutual fund companies have resources and experts which are above and beyond the reach of any individual investor. So, you have to trust them but only go for a reputed mutual funds company.

More Choice

With mutual funds, you get a variety of schemes to choose from on the basis of which scheme would suit your financial goals over a lifetime.

More Affordable

Mutual funds allow you to invest smaller amounts of money because of the minimal investment requirements. You may not be financially strong enough to buy shares of larger corporations on your own but with mutual funds you can start with investing a minimum amount of Rs.500 in a Systematic Investment Plan on regular basis.

Tax Benefits

If you can hold your investments for a period of 12 months or more, you would qualify for capital gains that get you tax benefits as well.

Liquidity

Mutual funds allow you to get in and out of investments quite easily. You can sell your mutual funds in a short period of time without any major difference between the sale price and the most current market value.

Low Cost

The biggest advantage of investing in mutual funds is that you get the convenience of investing low amounts with as low as Rs.500 and still get the advantage of a long-term equity investment.

Higher Returns

Mutual funds have the potential to generate higher returns from your invested funds. You can invest in a diverse range of sectors and industries. The returns will be based on whether you choose medium or long-term investment.

Conclusion

We agree that unlike bank FDs and RDs, there are risks involved with mutual funds. Mutual fund investments can experience market fluctuations and sometimes give you returns below the overall market but then there are chances of gaining higher returns as well, much more than your FDs could ever get you. You should not put all your eggs in one basket but you should definitely include mutual funds in your investment plans, aiming for higher returns by making your money work hard.