Mutual funds are professionally managed
The biggest advantage of investing in mutual funds is the presence of a professional fund manager. When you invest in a mutual fund scheme, a fund manager will take care of the investment decision. You don’t have to worry about the investment options and weigh their pros and cons. You can pay a small fee and hire a fund manager to do the job. Some of these fund managers and fund houses have vast experience managing people’s money.
You can invest as little as Rs 100
Most new investors believe that they need a large amount of money to start investing in mutual funds. This is not true. You can invest as little as 100 in a mutual fund scheme. Most mutual funds allow you to invest Rs 500 regularly via monthly Systematic Investment Plan. In short, start investing with whatever you have at the moment. You can start investing more when your income increases or your cash flow situation improves.
A diversified portfolio
When you are investing a small amount of money, you will be forced to bet on only a few options. However, a mutual fund scheme will offer you a diversified portfolio. This is because a mutual fund typically collects money from a large number of investors and invest the money for them. Since the scheme will have a large investment corpus, it will spread out the investments and offer better risk-adjusted returns.
A wide variety of options
Mutual funds offer a variety of investment options. Based on your financial goals and risk tolerance, you can choose the ideal investment option for you. For example, if you want to park money safely for a few days, you can invest in overnight funds. If you want to invest for a few months, you may choose a liquid scheme. If you are investing to fund your retirement, you can invest in an equity mutual fund that matches your risk profile.
You can buy and sell anytime
Most mutual funds allow you to buy and sell mutual fund units whenever you want. Most schemes are open- ended schemes that are open for purchases and redemption through the year. Sure, when you get the units or money depends on the time of purchase and redemption. However, you can mostly buy and sell schemes all the time.
