6 Reasons Why Investing Through Mutual Funds ‘Sahi Hai’

6 Reasons Why Investing Through Mutual Funds 'Sahi Hai'

Published on April 27th, 2020

While thinking about investing, a primary challenge people is to choose the right option.

The investment market is filled with options like fixed deposits, bonds, stocks, and their combinations.

Therefore, investors must consider their risk appetite and return of investment (ROI) to make the final call.

While there are many ways to invest your hard-earned money and get better returns, mutual funds are one of the most popular ones. That’s why the epigram: ‘Mutual Fund Sahi Hai’.

Mutual funds are managed by professionals working under asset management companies. Such funds enable you to invest in a diversified portfolio that is managed proficiently by the experts.

Mutual funds enable you to invest in stocks, bonds, and other financial securities collectively, without having to worry about the risk of investing in them individually.

Here are six reasons why investing through mutual funds ‘Sahi Hai’:

1. Portfolio Diversification

The most significant advantage of investing through mutual funds is portfolio diversification.

Its beauty lies in the fact that you can invest through one fund, and your money reaches to the stocks of many companies.

To achieve the same with other financial assets, you may have to invest separately otherwise, which becomes a hefty job.

In other words, mutual funds investment simplifies the process of investing your money into various assets at one go.

2. Systematic Investment Plans (SIP)

You can invest small amounts through mutual funds via Systematic Investment Plans (SIP).

SIPs make the investments easy as you can start with as little as Rs 500. You can set automated payments for monthly withdrawals, and your money will be invested through the mutual funds of your choice.

3. Fund Options For All

It has options for all kinds of investors, and that’s why mutual funds ‘Sahi hai’. From investors having huge capital to the ones who want to start investing thousand rupees per month, mutual funds are suitable for all.

It also offers transparency, as every investor can see their investments and their gains.

4. Reduced Tax Liability

Some of the mutual offer high liquidity and tax benefits to the investors. The capital gains from mutual funds are generally considered as an income source and are thus, taxable.

For instance, for investments made in Equity-Linked Savings Scheme (ELSS), you can claim tax deductions under section 80C of the IT Act.

5. Cost-Efficient

The minimum you can invest through mutual funds depends on the funds you choose.

But there are many funds with which you can start your investment journey with as little as Rs 500 per month. It is why mutual funds ‘Sahi hai’.

Also, even with such cost efficiency, you can get a diversified portfolio. Hence, better returns can be achieved.

6. Good Return Of Investment

Mutual funds let you invest in diverse instruments. If you compare it with conventional types of investments, these instruments offer better returns.

Depending on your risk appetite, select different types of funds. If you are a risk-averse investor, start with low-risk instruments like debt funds.

Mutual Funds ‘Sahi Hai’ For All

Investing through mutual funds lets you grow money through a diversified portfolio while keeping the transparency intact.

You can invest through mutual funds and achieve various goals of life; hence mutual funds ‘Sahi hai’. As you learn how to invest in various funds over time, you can build an excellent financial corpus.

Compounding interests and investments in mutual funds can also lead to significant growth in your financial portfolio, along with liquidity.

For investment advice about the selection of suitable funds, connect with financial advisors like FinEdge. They will help you build an investment portfolio as per your current financial liabilities.