Reasons small investors turning towards mutual funds
A lot of modern investors are getting interested in mutual funds. Mutual fund services offer cheap and easy means to get good returns. It is good to understand mutual funds before trying to invest in them. This will help you gain confidence in your investment strategies. An investment consultant can assist you to achieve your desired financial target by increasing the returns and lowering the risk factor. Currently, mutual funds offer one of the best ways to earn good returns.
- The power to invest in small amounts
A very useful feature of mutual funds is that it allows investors to invest in small amounts that can be as little as Rs. 500 every month. This is essential for a small investor. You do not have to wait till you have enough money so that you can buy stocks. Also, you do not have to invest in multiple stock prices. You can invest in any amount that you find easy for you. Thus, a SIP in mutual funds will allow investors to make the most out of the available cash and get the highest possible returns.
- Options for all types of investors
Mutual funds offer a significant tool for every type of investor. There are more than 2000 mutual fund services active at present. With so many options, investors can match their investment horizons and fulfill their financial goals, based on their risk appetite. If you do not want to take risks, you can opt for debt funds. People looking to take moderate risks can choose a hybrid or balanced funds.
- Creating a diversified portfolio
A mutual fund will mostly invest in either equity or debt. The benefit of investing in a mutual fund is that the investor would get exposure to different shares and fixed income instruments. If you want to invest Rs. 2000 in stocks directly, you might be able to buy 3-4 shares of a company. You might even be able to buy 1-2 shares of multiple companies. However, if you are investing in mutual funds, you would be getting a basket of different stocks at the same price.
- Highly liquid
Mutual funds offer a high liquidity factor, which is why a lot of small investors get attracted to them. If you invest in mutual funds, you would be able to purchase and sell the units, as required. You can start or stop a SIP on your wish. You can even redeem the money if you feel that the funds are not performing as you would like them to or your goal has been achieved.
- Mutual funds are cost-efficient
Investing in a mutual fund is cost-effective. If an investor is planning to invest directly in equity, there might be costs like Securities Transaction Tax and brokerage fees. if there are many transactions, the costs will be higher. All these costs will be negated in mutual funds as the fund managers will be doing bulk transactions. Thus, mutual fund services are much more cost-effective.
These are the reasons why so many small investors look towards investing in mutual funds.
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