It’s common knowledge that the number of people investing in mutual funds has increased significantly recently. What are the advantages of investing in these funds? Despite the risks involved, mutual funds have proved to be beneficial in the past. Let’s explore these benefits.
Returns from mutual funds depend on the performance of the stock market. However, despite the risk involved, investors have received good returns in the long run by looking at the past history. Many types of funds have given good returns, and the average returns are 12%. Due to this, many people are turning towards mutual funds. Compounding magic further increases the returns in a short period.
Let’s now take a look at some of the benefits of investing in mutual funds:
Expert Management: Mutual funds are managed by experienced fund managers who research and track the markets from time to time. They choose the right shares to buy and sell at the right time for higher returns.
Revenue: Mutual funds offer higher returns than traditional savings channels like bank fixed deposits, recurring deposits, and government schemes. Over the last 15 years, mutual funds have given average annual returns between 10% and 14%. However, it should be noted that there are sometimes disadvantages as well.
Diversity: Diversification is one of the greatest benefits offered by mutual funds. Investing in different shares diversifies the portfolio, so even if one company incurs losses, it can offset the losses with shares of another company, reducing the risk of loss.
Flexible Investments: Investing in mutual funds has become more flexible and accessible. Investments can be made online through agents and banks. KYC can also be completed online using the e-KYC facility.
Investment with small amounts: Small amounts can be invested in mutual funds. Systematic Investment Plan (SIP) allows monthly investments of Rs. 500 to start investing.
Liquidity: Mutual funds are suitable for investment and withdrawal. Investors can redeem units anytime, and the money will be credited to the account within 2 to 3 days.
Auto Debit: SIPs help you invest regularly in mutual funds. They also have an auto-debit facility, and the tenure of investments can be chosen weekly, monthly, or quarterly.
