Let’s start with a common question: What is a mutual fund? A mutual fund is an investment vehicle made up of funds from various investors in order to invest in securities such as stocks, bonds and even in money market securities. While mutual funds may be subject to market risk, they are promise certain benefits and are a great way to make capital gains. Read on to better understand the benefits offered by mutual funds.

A diversified investment that spreads risk
Mutual funds enable an investor to invest in multiple industries at the same time. This allows the investor to manage risk efficiently. Thus, even the fall of value of one industry can be compensated by the success of another. An investor can also choose to invest more in a sector that is more likely to do well, thus increasing their gains.

A smart and tax-saving investment
Buying and selling securities include transaction costs such as commission. The transaction cost decreases as the scale of purchase of a security increases. This means that when more securities are bought, the transaction cost goes down. This cost is known to eat up into profits and is thus avoided by investors. As mutual funds enable investors to purchase in large quantities, the transaction cost automatically drops, thus increasing your profits. Mutual funds are thus a smart investment avenue that is sure to garner larger gains. More importantly, investing in mutual funds also helps an investor like you to save on tax, making mutual funds one of the most preferred ways of investing.

Professionally guided to ensure gains
It is best if you invest in mutual funds that are managed by a professional. This ensures that your money will be invested in securities by an expert who is not only financially sound, but also has a good understanding of the investment market. This helps reduce the risk and increase your gains. A good manager will be able to mobilise your resources to help you make the most of out of your investment.

Easy and quick exit
Liquidating mutual funds is an easy and quick process. All you need to do is to inform your financial advisor. Mutual funds can be sold almost immediately and the money is credited back into your account in just a day or two in most cases. This is very efficient as compared to investing in individual stocks as liquidating them is a rather lengthy and time-consuming process.

A good start for beginners
If you wish to start investing, mutual funds are a great platform. As a small investor you may not be able to invest in larger companies with high share prices. Mutual funds buys securities in large volumes, thus lowering your trading cost. This enables small investors to get their feet wet. With minimal investment requirement, mutual funds are the perfect way for you to set forth on the investment journey.

Tailored for your needs
With a wide range of schemes available in the market, you can choose the one that suits you best. An appointment with your financial advisor and a run through about what you expect will do all the magic. Your financial advisor will help you select a mutual fund investment based on an investment strategy that mirrors your expectations.

Well regulated
Mutual Funds in India are controlled by SEBI (Securities Exchange Board of India). Transparency is thus a by-product of mutual fund investment, which allows investors to make an informed choice.
By protecting the interests of the investors, SEBI not only instils a sense of confidence in this type of investment, but also requires mutual funds to disclose the investor’s portfolios to them regularly, thus ensuring their funds are being invested in accordance to their wish.

With the best mutual fund interest rates, complete portfolio disclosure and liquidity, investing in mutual funds may be just what you are looking for. So it’s time to stop parking all your money in your bank account and to invest it for gains!

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