Benefits of Investing in Mutual Funds | Importance of Mutual Funds

Benefits of Mutual Funds

Benefits of investing in mutual funds involves its low and diversified approach of investing. Simply you can say it is the best way of investing if you are not comfortable in stock market. This does not means that mutual funds are free from market risks but it is managed and diversified.

What is Mutual Fund?

As we have discussed in previous articles Mutual fund is a very popular concept of investing. This is the way to collect funds from the public and invest the same in different sectors as diversified portfolio. Mutual funds are managed by market experts and professionals.

Why to invest in Mutual Fund? Importance of Mutual Funds

When buying a new stock, you have to see how it performs over the period of time. But mutual funds have the ability to produce better results with lower risks than do-it-yourself. You can’t have to look on the market all the time that needs in direct trading of stocks and commodities etc. in this case you can go for the mutual fund. There are many options available to invest. Go here for more detailed types of investment.

Benefits of Investing in Mutual funds | Importance of Mutual Funds

Here are some important benefits of investing in mutual funds that will really help you o find the way to decide investing in mutual funds;

Diversification of Risk

As mutual funds are invested in various segments/sectors so risk is diversified. Unlikely to individual investor all the money is not invested in any one or few stocks. Fund managers study the market and various high performing sectors and invest in diversified manners. So by doing this risk is diversified.

Mutual Funds Managed by Professionals

Full time professionals manage the Mutual Funds. They are much more knowledgeable and qualified in their field. They are efficient enough to manage your funds. Fund managers possess better data sources and skills to have better idea of investing your money with better foresightedness.

Mutual Fund Investment Provides Better Return

Mutual funds provide much increased returns as compare to traditional investments like fixed deposits, recurring deposits and other related instruments. Further due to professional management it certainly provides good return on equities. It generates high returns as long as you hold and give the time to mature your amount.

Flexibility in Investing in Mutual Funds

There is flexibility in transferring funds from one fund house to another. You can switch you funds with current value with some online/offline formalities. Further you can add up the amount at any stage in SIP and in Lump-sum both.

Low Cost of Investing and Benefits of Investing in Mutual Funds

if you’re investing in mutual funds then it will be cheaper than purchasing shares as individual. You need only INR 500/- to get started to invest in Mutual Fund as Systematic Investment Plan (SIP) and INR 5000/- for lump-sum investment.

Low Risk in Investing in Mutual Funds

As you know, funds are managed by professionals so Investing in Mutual Funds holds low risk. Further the risk is minimum as it is already diversified.

Freedom to Choose Your Own Fund Manager

With mutual funds, you get control over who buys and sells your shares. You get this benefit of choosing your fund manager. There a number of funds managers e.g. SBI Mutual, TATA Mutual Funds, Birla Sun Life, HDFC Mutual etc. You can choose any or many out of them.

High Growth on Long Term Investments

Unlike traditional fixed income portfolios where you invest in fixed assets mutual funds allow you to grow your investment corpus by adding more stocks over time. By doing this, you are able to create an asset allocation strategy.

Transparency in Operations and Benefits of Investing in Mutual Funds

There is very transparent structure of mutual fund houses. Government regulates the fund houses with strict compliance through SEBI (Securities Exchange Board of India). The fund houses publish their reports of investing and return on regular basis and available in public domain.

Free from routine vigilance

As you have professionals behind you to manage your portfolio. So you need not to be very vigilant to the markets and can relax without many involvements. In short, mutual funds do things differently where you can invest with relaxed mind. If you have limited knowledge of investing even then you can take this opportunity. As the average returns of mutual funds vary around 10% -15%. This is better than traditional investments like FDs, RDs and Bonds etc. this return is only and normally it and can be more or less as per the fund managers skills and financial decisions. Here you need not to think and look on the portfolio on daily basis.


In conclusion you can understand the benefits of investing in mutual funds. So here you can create wealth as per you focused goals and fulfill the same.

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3 thoughts on “Benefits of Investing in Mutual Funds | Importance of Mutual Funds”

  1. Pingback: reserve Bank of India hikes interest rates after two years | Impact of RBI rates hike on Stock market - Mudra Money

  2. This is the perfect blog for anybody who wants to find out about this topic. You know a whole lot its almost hard to argue with you (not that I actually would want toÖHaHa). You certainly put a fresh spin on a topic thats been written about for a long time. Excellent stuff, just wonderful!

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