4 Benefits Of Investing In Mutual Funds

[Shashank Bhaskar]

Every investment provides you with returns and interest so that you can plan your future expenses. Your invested amount starts multiplying over the tenure, and you get fixed returns on it. Most of the investments involve risks of market fluctuations, but they are also suitable for wealth creation.

Mutual fund investment is a prolific source of investment for all small and medium investors. You can also start generating returns and plan your future accordingly. Here are the benefits of investing in them:

1. Professional management: A mutual fund scheme pools money from many investors and allocates it into equities or other asset classes like debt, liquid assets, gold, etc. While holding units of a mutual fund portfolio, you become the owner of a part of it with a broader holding in shares. You have a professional fund manager supported by a team of analysts, dealers, and traders extracting value from every corner of the market. 
   
   
2. The spread of risks: When you invest in mutual fund, it diversifies and spreads your risks at two levels. Firstly, it extends your overall assets across equity, debt, and liquid instruments. Secondly, even in the case of equity funds, your money is invested across sectors and themes. Your profitability does not depend entirely on a handful of stocks or sectors. The risk gets spread.
   
   
3. Variety of investment choices: When you opt for an online mutual fund, you can choose between different equity funds like index, sectoral, thematic, diversified, mid-cap, small cap, etc. You can select the desired credit risk and duration within debt funds, like long-term funds, short-term funds, gilt funds, corporate bond funds, etc.
   
   You can decide on not just the asset classes but also the timing of investment. You can invest in a lump sum, systematic investment plan (SIP), a variable SIP, or a bulleted structure. You can structure the withdrawals as dividends, capital gains, or systematic withdrawals.  
   
   
4. Liquidity: One of the critical considerations for online mutual fund investment is easy liquidity. In the case of open-ended funds, you can redeem your holdings at any time. For liquid and debt funds, you get the money in your bank account within one day of applying.

You can select your mutual fund plan directly through the Asset Management Company (AMC).  You can log on to the mutual fund agency’s website or use mutual fund apps for the convenience of investing. Select the mutual fund house from the list and pick your scheme based on your risk tolerance and investment objective. Enter the investment amount and fill in your details to complete the transaction.