Why you have an advantage when you invest in mutual funds

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Why you have an advantage when you invest in Mutual Funds

Mutual funds can be liquidated at any point of time that you – the investor – want to. This is the most crucial benefit that you get over here. This is where they are different from the likes of fixed deposits. However, please remember that with this immense flexibility in withdrawal you must also be wary of the likes of exit load and pre-exit penalty.

 

They offer you great diversification

 

Your investments would not lose or gain value together. It could be that when one of your investments is faring poorly you would get good returns on the others. This means that your overall portfolio would perform pretty consistently. There is little chance that market volatility would affect your mutual fund returns. When you diversify your portfolio you reduce the risk that is involved in the same. Mutual funds usually are made up of lots of securities. This makes sure that your interests as an investor are always secure. Even if a few assets owned by you do not perform as per your expectations the performance of the others can more than make up for that.

 

They are managed by experts 

 

This is especially true when you go for a top-class fund house such as ICICI Direct. If you are new to this world you would not know which mutual fund you should pick to maximize your gains. You would also have little idea of the ideal ways in which you can invest your money in these cases. The thing with mutual funds is that they are run and administered by experts. They normally pool in the money that investors like you pump in the same and then they distribute it among various assets. They do it in such a way that you can make profits on your investment. They manage it all so that you do not have to worry.

 

They provide you with the best tax savings 

          

The mutual fund tax benefits are one of the biggest reasons why you can invest in these. Right now the ELSS (equity-linked savings scheme) mutual funds have a tax exemption of 1.5 lakh rupees a year as per Section 80C of the Indian Income Tax Act. You can also use various online income tax calculators and find out how much you can invest in these funds and save money on taxes in the process. The other mutual funds of India are subjected to varied tax rates based on how long you are investing in them and the kind of investment.  

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