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Advantages & Benefits of Investing in Mutual Funds

Since the inception of mutual funds, they have been a popular investment option for investors. The simplicity of understanding and the features provides great benefits to the investors with limited knowledge, money and time. Let us see what are the benefits of investing in mutual funds.

Mutual Funds Investment Benefits

Diversification

The main benefit of investing in mutual funds is asset diversification. For example, an investor can buy stocks in the retail sector and then buy some other stocks in the industrial sector at the same time. This will help them to reduce the impact of market fluctuations and save the losses on the portfolio. Buying them can be a costly affair. Other mutual fund benefits are instant diversification and asset allocation without having to pay too much.

Easy to divide stocks

Many investors cannot buy a lot of stocks with the money they have especially after deducting commission. But, with mutual funds, investors can buy in smaller denominations. This, in turn, will help them make periodic investments through monthly plans when taking advantage of dollar cost averaging. So, rather than wait for the money accumulate, you can invest in mutual funds.

Liquidity

Another major advantage of mutual funds is the ability to get in and out without hassle. The investor can sell their mutual funds in a short period of time without having much difference between sale price and current market value.

Cost Benefit

Mutual funds do not eat away a large chunk of your money. For example, when you buy 1 piece of apple, the cost will be less when a dozen of apples is bought together. This also happens in the buy and sale of securities. If you buy one security at a time, the cost will be high. But, mutual funds are able to take advantage of the buying and selling size and helps to reduce the transaction cost.

If the benefits are not convincing, take a look at the Advantages of mutual funds.

Professional Expertise

Investing requires financial know-how and skills. It requires a constant study of the markets and various industries and companies. To be a successful investor, you need someone professional to manage your money. In India, the fund managers are acquiring global certificates like CFA, MBA which provides them with cutting edge knowledge of the investing world.

Ease of Process

If you have a bank account and a PAN number, you can start investing right away. Since all the funds are well integrated with the system, the money will arrive at your bank account. This is a major advantage of investing in mutual funds.

You have to fill up a form attach a copy of your PAN and sign a cheque to start investing. In the top 8-10 cities of India, there are many collection points and distributors which make it easy to send the application.

Regulated by SEBI

Indian mutual funds are well regulated by the Securities Exchange Board of India (SEBI). The institute monitors the transactions and maintains transparency on the mutual funds. This helps to make the investor an informed choice. You can keep track of all the investment and the transactions made on the money.

Choices in Mutual Funds

The choices of schemes in mutual funds are vast. Whenever you progress in life, you will have to sit with your investor and make an informed decision about the different schemes. One can make changes in the portfolio as and when needed.

Besides, the above-mentioned advantage of mutual funds you can enjoy tax benefits. The money time your money is invested in mutual funds, the more advantage you enjoy of taxation.