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Mutual funds hold a special place in the gamut of investment products available in the market. There are thousands of different mutual fund schemes in India and you can choose to invest in any of them based on your investment goals and risk appetite.
In this article, let’s discuss the benefits of investing in mutual funds and how you can benefit from the various kinds of mutual funds.
Advantages of investing in mutual funds:1) Professional expertise
A vital reason why most people invest in mutual funds is that they are professionally managed. Mutual fund houses set up clear investment objectives for each fund, and appoint professional fund managers to invest your money. This can be of significance option if don’t have the time or expertise to study, analyse and buy different stocks and bonds. reliancesmartmoney.com offers you several such mutual funds that you can compare and choose from.
2) Diversification
Mutual Fund investments are exposed to market risks and as an investor, it is necessary to minimise these risks. This is possible through diversification. Diversification is an investment strategy, where you invest across a wide range of assets to lower your risk exposure. Typically, you may need to handpick around 10-20 stocks to diversify your portfolio. In comparison, a mutual fund invests in different stocks, thus it gets exposure to from different sectors & avoids concentration in any particular sector. Index funds track market indexes, like BSE 500 index. This allows you to achieve diversification in a simple and cost-efficient manner.
3) Investment discipline
Equity mutual funds allow you to invest in small sums of money at regular intervals through Systematic Investment Plans (SIPs). A SIP makes it easy for new investors to begin their investment journey with as little as Rs. 500. Investing these small sums on a regular basis creates investment discipline and can help you achieve long-term wealth.
4) Liquidity
Mutual funds offer liquidity. You can withdraw your funds at any time (except for Equity Linked Saving Schemes, which have a three-year lock-in period) in case you wish to address any financial emergencies. This feature offers you greater control of your funds.
Conclusion
It doesn’t matter how much you invest as long as you invest regularly. Start investing at an early age and increase the investment amount as your income increases. This will let you harness the power of compounding and achieve long-term financial growth over time.
