What are the benefits of investing in mutual funds?

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There are several reasons why investing in mutual funds is a healthy investment option:

Professional management

When you invest in mutual funds, you may quit worrying about where and how to invest. Let your fund managers take a call based on thorough market research, monitoring and experience.

Diversification

Mutual funds can also invest in other assets like bonds, cash, or commodities like gold and other precious metals. This is called diversification and it allows you to reduce the risk of investing in one particular stock or sector. Additionally, it gives you a broader exposure to various stocks and sectors.

Liquidity

Mutual funds are more or less classified as liquid investments; unless guided by a pre-specified lock-in period. This means, as an investor you can redeem your unit holdings at any point (subject to exit load, if any) -- giving you any time access to your money. Further, funds are well integrated with the banking system -- which means that most funds can transfer money directly to your bank account.

Ease of investment

You can invest in mutual funds either directly or through a financial advisor. A mutual fund allows you to start with small investments. For instance, a SIP lets you invest small amounts of money (as low as Rs. 500) at regular intervals – helping you achieve your financial goals through disciplined and systematic investing.

Rupee cost averaging

When you invest in mutual funds through the SIP investment route, you can benefit from “rupee cost averaging”. This means you buy a larger number of units when markets are low and a smaller number of units when markets are high. This averages out your total cost while safeguarding you from the ups and downs of the market.

Variety in investing

Mutual Funds offer multiple scheme options depending upon your financial goal, risk appetite and time horizon.

Transparency

Investors can stay updated on information pertaining to the markets and schemes by logging on to our website or calling our customer care. They can view factsheets, offer documents, annual reports, etc.

Well regulated

Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI). The body protects the interests of investors. This helps mutual funds to be a safer means of investment. Mutual funds are required to provide investors with standard information about their investments, in addition to other disclosures like specific investments made by the scheme and the quantity of investment in each security.