There are many reasons to buy a mutual fund. How about we look at the top reasons to buy a mutual fund!
Professional Management: The pool of money that investors contribute is invested by experts in the financial markets (Fund Managers). These fund managers have the knowledge and information, necessary to make informed investment decisions according to the fund’s objectives.
Diversification of Risk: Because investors contribute to a large pool of money, managers can easily diversify between many individual securities, so fund returns are not heavily dependant on the ups and downs of a few select investments.
Another reason to invest in mutual funds is their adherence to a basic principal of investing: Don’t put all your eggs in one basket. In other words, many different types of investments in one portfolio decrease your risk of loss from any one of those investments.
Convenience: The mutual fund company does all the record-keeping, providing regular reports and portfolio for the schemes you have invested and all these reports are also available on their websites
Return Potential: Comparison of Sensex and Mutual Fund returns from ppt.
Low Amounts: Many mutual fund companies allow investors to get started in a mutual fund with as little as Rs.5000 lumpsum or even low in some Mutual Fund company and as little as Rs.100p.m. through SIP. This makes MF favorites among small Investors.
Liquidity: Mutual funds are very convenient since they can be quickly bought and redeem, the proceeds from the sale are available max2max in 3 working days on electronic transfer and 7 to 10 days in cheque payment.
Transparency: Mutual fund holdings are publicly available online on their respective websites as well as in Mutual Fund office which ensures that investors know about schemes in which they pay for.
Choice of schemes: Depending on investor financial goals and tolerance for risk there are a wide range of mutual funds available to you. Please seek the advice of an advisor to ensure that the investment you choose complements your overall financial plan.
Well regulated: In India mutual funds function as trusts the entire mutual fund industry functions under the preview of SEBI. The structure and stringent guidance make investing in mutual funds safe and easy. Fund Managers also have to function within the broad framework and rules & regulations designed by AMC.
Mutual funds are investment vehicles, and you can use them to invest in asset classes such as equities or fixed income. We recommend that you use the mutual fund investment route rather than invest yourself, unless you have the required temperament, aptitude and technical knowledge.