Benefits Of Mutual Funds Investment

Being an investor, you would always like to have maximum returns on whatever you are investing

, but you may not have required time to constantly study the stock market in order to keep a track of them. You will require a lot of time and knowledge in order to decide what to purchase and when to sell. Many people take a chance and speculate, where some of them get lucky, most of them dont. Here comes the need of mutual funds. Mentioned below are some of the benefits of Mutual Funds:

Professional management:

Skilled professionals take care of your money, but they are not alone. Along with them they have a team for research that continuously analyses the performance and forecasts of different companies. They also choose appropriate investments to accomplish the objectives of the scheme. It is a continuous practice that takes time and expertise which will add value to your investment. Fund managers are the best people to handle your investments and get higher returns.

Diversification:

The saying, "don't put all your eggs in one basket" actually applies to the concept of smart investing. Diversified investment gets down your risk of loss by scattering your money across diverse industries and different geographic regions. It is an exceptional incident when all stocks decline at the same point of time and in the same proportion. Sector funds scatter your investment across a single industry so they are less diversified and hence more unstable.

Variety of choice:

Mutual funds have a range of schemes that will be suitable to your needs over a lifetime. When you come in a new stage in your life, you just need to sit down with your financial advisor who will guide you to rearrange your portfolio to match your changed lifestyle.

Affordable:

Being a small investor, you may find that it is not affordable to purchase shares of big companies. Mutual funds usually buy and sell securities in large volumes which allow investors to benefit from less trading fees.

Benefits on Tax:

Investments done by investors for a period of 1 year or more are eligible for capital gains and will be taxed accordingly. Advantage of indexation is also applicable to these investments.

Liquidity:

With open-end funds, you can convert in cash the all or part of your investment whenever you wish and get the current value of the shares.

Rupee-cost averaging:

In rupee-cost averaging, you invest a certain rupee amount at regular time periods regardless of the investment's unit price. Consequently, your money purchases more units when the price is low and few units when the price is high. Rupee-cost averaging permits you to discipline yourself by investing every month or quarter rather than making irregular investments.

Transparency:

Various publications and rating agencies analyze the performance of mutual funds, which makes it easy for investors to compare these funds with another.

Regulation of SEBI:

All mutual funds are registered with SEBI (Securities Exchange Board of India). They follow strict regulations which are made to protect investors.

by: Rajendra Bhatia

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