Mutual Funds – What Is The Fuss All About?

We are constantly told that Mutual Funds Sahi Hai. They have myriad benefits that can help us achieve our goals and smoothen our investment journey. While this might be entirely true, it would be interesting to explore the factors that make mutual funds Sahi.  

Convenience                                                                        

Investment is considered a complex field, difficult and challenging to navigate. This is one of the primary reasons why individuals make sub-optimal savings and investment decisions. However, mutual funds offer a simple and convenient way of investing. All you need is a know your customer (KYC) compliant bank account and a PAN. You could fill in an application form and submit it online or offline, either directly or through intermediaries. Additionally, you do not need to have a big corpus to start your investment journey. You can start small and invest as per your comfort and convenience.

Professionally Managed By Experts

As most investors do not have the time and resources to manage investments on their own, they find it better to opt for professionally managed portfolios. Mutual fund portfolios are managed by qualified, trained, and experienced fund managers who have access to real-time market data that helps them conduct in-depth fundamental and technical research to keep a track of current and potential securities in their scheme. As they execute large trades at a time, they are able to buy and sell securities cost-effectively.

Diversification

Mutual funds have various schemes that are focused on multiple asset classes and strategies. These schemes have varying levels of risk with each carrying a different return potential. So, if you are an investor who wants to invest in debt or equity, mutual funds have a proposition for you. If you are an investor who wants to invest in a particular strategy, theme or market cap, mutual funds have a solution for you. Whether you an investor who has a moderate risk taking ability or an investor who has a high risk taking ability, there is a mutual fund for you. Essentially, mutual funds can help create a diversified portfolio, which can meet the myriad financial goals of an individual.

Create and Preserve Wealth

Mutual funds can be your financial partner for life. If you plan well and start investing early enough, mutual funds can help you create and preserve wealth so that you achieve all your financial goals and aspirations. Before you begin investing, you must divide your wealth based on your short, medium and long-term needs. Do consider consulting a financial advisor to check which mutual fund scheme is suitable for your risk profile and requirements.

Save Tax

Along with being tools of wealth creation, mutual funds can also help you save tax in the long run. There are various mutual fund schemes, for example, an ELSS that can help you save tax. ELSS is a mutual fund scheme which predominantly invests in equity. Investment in an ELSS mutual fund is eligible for tax deduction up to Rs. 150000 and comes with a 3-year compulsory lock-in period.