Whenever we think of putting our money into any investment project, we first make sure that the project is competent enough to provide maximum returns. Losing your hard-earned money is never acceptable, and this is why we are sometimes hesitant to make investments. But, this is not the solution.
Investments have the ability to change our future and create a fortune. So why is it necessary to skip the idea due to some doubts in mind? Instead, we must think of alternatives that can promise the desired results. The mutual fund is one of the best alternatives in this regard.
What is the main risk associated with an investment project? The only answer is market volatility, which affects the return on our investments. And, the mutual fund has the best solution for the same. It is a program in which the fund manager pools money from many investors and places them into diversified investment plans to reduce the associated risk. One can go for mutual funds to get many benefits involving the following:
- Diversification: The most important feature that sets it apart from others is its diversifying nature. Investors’ money is allocated to various assets in a way that reduces the risk exposure of any one asset or scheme. Since not all plans will experience declines simultaneously, putting money into multiple plans is intended to diversify risk factors.
- Yield maximization: As the funds are placed in varied investments, it provides the highest possible returns to investors. So one can meet their investment goals by putting money into mutual funds.
- Liquidity: It consists of several open-ended schemes, which are liquid in nature and provide easy cash convertibility to investors. Therefore, one can easily redeem their funds whenever required and realize the money.
- Flexibility: Money helps a person get through tough times with ease, and this is why you never want to fall into a rigid investment structure. However, the schemes designed below do not have a lock-in period. Therefore, an investor can opt out of it when needed with the help of the redemption process.
- Professional Fund Management: The money we invest in the schemes is handled by fund managers who are professionally trained and highly experienced. Therefore, we can ensure that our monies are managed with expertise.
- Tax Savings: An investor bears the burden of paying a large amount of taxes to the government. There are several schemes under the mutual fund program that offer tax benefits under section 80C of the Income Tax Act. Therefore, the tax amount can also be saved.
- Different ways to invest: An investor can put money into investment schemes by making payment in ‘Lump Sum’ or using ‘Systematic Investment Scheme’, in which the investment amount is payable in easy installments.
- Different investment modes: Investors can put their money into mutual funds using either ‘online’ or ‘offline’ modes, depending on their feasibility and convenience.
- Well regulated: There are a large number of asset management companies that are registered with the Securities and Exchange Board of India. They manage the funds of the mutual fund program and, consequently, ensure proper regulation of the money.
- Contribution to economic growth: It provides a great benefit to the economy by investing the funds in various sectors of the country. Thus, an individual investor can also contribute to creating wealth for the country.
Consequently, an investor can get the most out of their investment by putting money into a mutual fund program and achieving investment goals. To counter volatility and earn good returns, it’s the smart approach to investing.