Mutual Fund: All You Need To Know
Mutual Fund is gaining popularity among young investors as it promises higher returns as compared to conventional Investment schemes. Furthermore, the mode of investment in Mutual Funds has been simplified in the last few years. Individuals interested in Mutual Funds may initiate the process online, simply by registering themselves with any of the Mutual Fund intermediary in order to start investing.
Investment in Mutual Funds is a low risk investment when compared to investment in Equity Stocks as the Capital Market is prone to fluctuations and downturns. Diversification of Funds in Mutual Funds allows mitigation of risk, as the fund is invested in several asset categories and securities. Thereby, reduces risk due to under performance of any specific stock or sector. Mutual Funds offers a lot of flexibility in terms of investment. As various categories & types of Mutual Fund is available based on the risk appetite, tenure, financial goals and market exposure (investment).
Factors favoring Investment in Mutual Fund:
Low Interest Rates on Guaranteed Return Products: Interest rates offered on popular investment products such as Public Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP) has been mediocre for a while now. Whereas, Mutual Fund provides opportunity to earn better return on investment in the long run. Equity Linked Savings Schemes (ELSS) also offer tax benefits on Investments.
Low Investment Requirement: One of the major advantages of investing in Mutual Fund is that an Individual may start with SIP (Systematic Investment Plan) with contribution as low as Rs 500/- per month.
Professional Management of Funds: Mutual Funds are professionally managed by Fund Managers. The Fund Managers use their expertise to ensure optimal return on investment. Thus, Investors need not worry about the management of investment. However, one should keep track of the performance of the Fund.
Ease of Investment: Investment in Mutual Funds is easy. Individuals may start investing at any point of time. Investment may be made via online or offline mode as per the convenience of the Investor.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities. Readers are advised to research further to have more clarity on the topic. It is very important to do your own analysis and consult your Financial Advisor before making any investment based decision.