Top reasons to invest in Mutual Funds

Mutual Funds are financial vehicles that accumulate investments from shareholders. This corpus is managed by expert fund managers who invest them in Bonds, stocks, Money Market instruments, etc. Investments are done based on the fund objective to generate income for the investors. Hence, Mutual Funds allow an individual or small investors to get access to diverse and professionally managed portfolios made of stocks, Bonds, and other securities.
Reasons to invest
Whether you are a first-timer or investing in Mutual Funds depends on your financial goals, risk appetite, and investment horizon. As an investor, you need to compare your needs with the fund’s objectives. This lets you invest in the right mix of funds and allows you to make the most of your money. Some of the possible benefits you derive when you choose to invest in Mutual Funds include:
Investing is easy
The investment process is simple. You can start slowly with one fund and gradually create a diverse portfolio as your confidence builds.
Ensures expert management
You do not require research and asset allocation skills when investing. You also need not create time to track all the market changes. Instead, your fund manager handles all that and makes all the important investment decisions for you. Hence, it is important that you choose a fund with an excellent track record and that is managed by a reputed manager. This makes sure you earn the maximum profits, consistently.
Provides tax benefits
Tax-Saving Funds like Equity-Linked Savings Scheme offers numerous tax deductions. For example, you can get up to Rs. 1.5 lakh annual deduction under Section 80C of the Tax Act when you invest. Additionally, these funds have a three-year lock-in period. The gains are classified as Long-Term Capital Gains and the first Rs. 1 lakh in gains is exempted from taxes.
Allows smaller investments
You can invest in Mutual Funds either through Lumpsum or Systematic Investment Plans. This is a boon for people who do not have a large corpus to start investing. You can also easily use a SIP investment calculator to determine how much you need to invest regularly to match your financial goals. Thereafter, adjust your SIP amount accordingly.
SIPs also allow you to reduce the average cost of your investment and enable you to take advantage of rupee cost averaging.
They are liquid
Besides funds that are classified as closed-ended, it is relatively easy to invest in and exit a Mutual Fund scheme. For example, you can take advantage of the time when the market is high and sell your fund units. This lets you exit while allowing you to make a profit at the same time.