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Advantages of Mutual Fund
A mutual fund is nowadays the most common word for Investor. The advantages of mutual fund attract new and old investors. You can see Regular advertisement of Mutual Fund in Business as well as entertainment channels. They are earning more popularity every next passing day. The adults old age investor and newbies of Stock market are getting attracted by mutual funds. The reason behind all this is advantages of Mutual fund over other investment ideas.
You may be come across many YouTube videos and blog post which are featuring long term investment idea. The Mutual fund provide more compounding wealth creation in long term. The advantages of mutual fund attract the long term investor.
Advantages of Mutual Fund
It is one of the most preferred options for investors nowadays to invest in Stock Market, Government Securities, Digital Gold and Debt Bonds. The Mutual fund offer various mode for the investment, which make it more attractive. Although it has some amount of risk still people are investigating it because with the proper plan, you can easily get huge returns. Below is the list of the benefits provided by mutual funds:
- Bright Option for Investment
- Investment at Low Cost
- Funds are Regulated Very Well
- Managed by professionals
- Availability of multiple investment options
- Risk diversification
- Easy in switching funds
- simple tracking of funds
- Advantage of tax-saving
- simple purchase and redemption
The Advantages of mutual fund are more than this, But we will talk about these listed 10 advantages of Mutual Fund. You can also read our article Mutual Fund Investment Guide if you want to invest your money in Mutual Fund plan. You must have start your SIP for the Mutual fund investment. The detailed analysis of Advantages of Mutual fund discussed below.
Bright option of investment
Everyone is now aware of some of the well-known benefits of mutual funds. Here we will know about some extra which is very unknown. if you invest in Stock market or Cryptocurrency there will be always the risk of losing your money in just a second if you have chosen the wrong Stock or Cryptocurrency.
The some cryptocurrency investor took their investment journey to far from investing, now for many crypto investor become gambler! The mutual fund are less riskier than crypto. The advantages of mutual fund over crypto topic is highly debatable.
The Mutual Fund Units price move very slowly, because of this you can get compounding interest on your investment. Even your loss in Investment is minizine as the slow moving unit price. According to my Experience you must try to reduce your risk by doing your investment in multiple assets and different sectors. Never Invest your full money in one stock or Mutual Fund. Always try to invest in well researched Mutual Fund.
Investment with Low Service Cost
You can start your mutual fund investment with the low amount also. if you don’t have much amount of money for investment this is the best option because you can invest here at a very low cost.
This makes a mutual fund an extremely good investment platform for New and small Investor. The Asset management Service is provided by the company at a very low cost because all this cost is divided among all the mutual fund investors. So you can enjoy professional service at low cost.
If you hire professional for Portfolio management service then it will cost you huge. But with the Mutual fund, You can invest your SIP amount with professional Fund manager.
Funds are regulated very well
All the investments are regulated properly by the SEBI (Securities and Exchange Board of India). The SEBI has made some rules and regulations which everyone has to follow strictly. every transaction should be according to the rules and regulations. The benefit of this is that it works for the the benefit of both investors and providers proper treatment. Because of Active role of SEBI in mutual fund industry, every investor feeling safe and secure while transacting and investing in Mutual Fund.
Managed by Professionals
Mutual Fund is managed by experts and masterminds of this field with a huge work experience. This gives trust to new investors who don’t know in-depth about Market. It is also helpful to the new investor as they can invest in this mutual fund with the help of extra talented professionals. Additionally, it will also take care of your transaction, portfolio and plans on your guidance.
Mutual Fund Investing
The Mutual Fund Scheme lead by Fund manager who have far superior knowledge of the current market condition. The Fund Manager and their well talented team, handle your money with the goal of profit maximization.
Availability of multiple investment options
if you are an investor you will be provided with multiple options for investment in mutual funds. You can invest in Sector-specific funds, Index Fund, Tax saving funds, Money market funds or liquid funds, Fixed income or debt mutual funds, Balanced funds, Hybrid / Monthly Income Plans, Gilt funds. As we mentioned you can invest in these type of Mutual fund without well knowledge of market.
you will be provided with the benefit of choosing your investment. You have full freedom to choose your funds based on the return you want to earn. Remember High Risk, High Return. You can invest your money in Balanced fund, Government securities. If you need your return in a very short time then you should invest in funds that will provide you with a return in a very short time.
Mutual Fund also has the option of regular earning then you need to invest in Long Term funds. if you want your investment and earnings you should select for growth option here you will be returned in the form of dividends at the regular time. Which will act as a regular income.
Risk Diversification
Every Investor must work to Risk Minimization. As we know mutual funds have some risks too. But if you invest in more than one Investment scheme you can diversify your Risk too. You can invest in Gold Bond Fund, Government Securities and Debt Bond related Mutual Fund scheme to minimize your Risk. The risk diversion advantages of mutual fund offer great benefits to low risk profile customer.
It is depending on the investor to how much risk he wants to take. As I earlier said funds that have high returns also have a high risk too. So based on your risk-taking power you can invest in Mutual Fund Scheme.
Easy in switching funds
This provides you a option of changing your scheme or investment plan in between. Remember this advantage is available only by some mutual fund companies. You can’t switch your investment Unit to other Mutual fund company. You can switch your fund between same companies Mutual fund offering.
Simple tracking of funds
If you invest your money in Recurring deposit or Term Deposit then you can’t track your interest, profit in Real time. But you can see your mutual fund fund’s performance with the Application. You can see your return, invested amount in mutual fund.
Advantage of tax-saving
Mutual fund provide you option to invest in it Tax Saver Mutual Fund offering. Thus it provides you with an extra benefit of tax saving. When you invest in tax-saving schemes you are eligible to claim Tax benefits in your Income Tax Return. The Tax Saver Mutual fund offering known as ELSS. The full form of ELSS is Equity Linked Savings Scheme.
If you are in Tax slab then you can invest your money in Tax savings mutual fund. The Tax savings advantage of mutual fund can attract salaried person for long term investment.
ELSS fund Investment allows an individual or HUF a deduction from total income of up to Rs. 1.5 lacs under Sec 80C of Income Tax Act 1961. But remember ELSS scheme have three years of lock in period from the date of Unit allotment. You can Start your SIP in these ELSS funds. You can claim investments up to ₹ 1.5 lakhs in Tax deduction in one financial year.
Simple purchase and redemption
“Buy Anytime, Sell Anytime”. The Mutual fund investment will take time to deliver better return. The Mutual Fund Unit holder can buy and sell Mutual fund with the simple option. You can sell your mutual fund investment anytime. It gives you flexibility with your investment.
Conclusion
If you are interested in Mutual Fund investment then these are the benefits of investing in mutual funds which make it more attractive. Based on your risk management skills you can invest in any Mutual fund offerings. The advantages of Mutual fund make it better option for the long term investment. You can invest in Mutual fund without great experience in Financial market.
The Mutual fund manager always try to deliver you superior return than traditional investment ideas. The information was updated on 10-09-2022. If you find any mistake in Article Advantages of mutual fund then comment below.