Mutual funds are one of the best investment avenues that are available to the mankind. Do not believe us? See it for yourself. This article will cover seven distinct reasons why you must consider including mutual fund investments in your investment portfolio.
Why should I invest in mutual funds?
Here are 7 distinct reasons why you must invest in mutual funds:
1.Different ways to invest
As an investor you have the option to decide the investment mode for your investments basis your investment portfolio. You can either invest in mutual funds via a lumpsum mode of investment or SIP (systematic investment plan) mode. Both these modes of investments have their own pros and cons.
2.Wide variety to choose from
There are different types of mutual funds that can satisfy varying needs and demands of investors. Whether you are looking to invest to achieve your short-term goals or your long-term goals, there are mutual funds for all your goals. You can either invest in debt funds, or equity funds, or hybrid funds, or tax-saving mutual funds, whatever aligns with your investment portfolio.
3.Ease of investing
It’s very easy to begin your investment journey in mutual funds. Unlike buying a stock, you do not need to open a DEMAT account (dematerialized account) and produce thousands of documents. Mutual funds simply require your PAN (permanent account number) card details and bank details. What’s more, thanks to technology you can easily invest in mutual funds online with the comfort from your home at just a few clicks.
4.Professional management
One of the best things about mutual fund investments is the professional management it offers to its investors. When you invest in mutual funds, a fund manager professionally manages your investments who does all the work from research to creating an asset allocation strategy to choosing the right mode of investment options for your portfolio.
5.Potential to earn significant returns
Mutual funds have a huge potential to offer substantial returns to investors when invested for a prolonged duration. Historically, mutual funds have offered double-digit returns to investors when invested for a long investment horizon. If you wish to create wealth, then equity is the answer.
6.Helps to create a diversified investment portfolio
As there are different types of asset classes available under mutual fund investments, it helps to diversify your investment portfolio. Diversifying your investment portfolio will help to offset the losses arising from any one type of investment against the gains from another investment.
7.No prior knowledge required
Mutual funds do not require investors to extensively research the markets and have an exhaustive experience of investing in the markets. Thus, they are ideal investment avenue for investors who are new to the investing world.
Before you decide to invest in mutual funds, you must consider certain parameters such as your risk appetite, investment tenure, financial requirements and goals, etc. In short, your mutual fund investments must align with your investment portfolio. Happy investing!
