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How Mutual Funds Help Meet Financial Goals? Research Team | Posted On Monday, January 01,2018, 07:09 PM

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How Mutual Funds Help Meet Financial Goals?



Investing in mutual funds is the best way to achieve financial goals. A mutual fund pools investors money and invests on their behalf. It is a convenient way of investing for those who don't know much about investments, or those who don't have the time to manage their investments.

While investing in a mutual fund, investors can choose the funds, based on financial goals. The Mutual Fund manager who receives your investment, decides on which stocks or bonds to invest, on your behalf.

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Take a look at the 6 advantages of investing in mutual funds

1. Mutual funds are professionally managed



The greatest benefit of investing in Mutual funds is they are professionally managed.  In mutual funds, you are provided with the services of an experienced fund manager, who makes the financial decisions. Before investing your money in any company, these managers study the performance, competitive advantages and growth prospects of the company. Fund Managers will have real-time access to crucial market information and always work towards achieving your financial goals.

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2. Mutual funds enjoy the diversification benefit


 Mutual funds help in diversifying your portfolio. There is a great saying, "Don't put all your eggs in one basket." This saying means you should not invest all your money in stocks of a single sector. Investing in mutual funds gives you the ownership of 10 different stocks or bonds. The diversified portfolio will be less volatile and helps in growing your money to meet financial goals.

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3. Mutual funds are a low cost investment


The low investment costs of mutual funds are another advantage, as many investors do not have sufficient resources/money to invest directly in a large number of stocks. Also, investing directly in the capital markets, can be very expensive and requires constant monitoring.

Since mutual funds manage a large number of investments from various investors, cost of investing is distributed. This makes mutual funds less costly, compared to direct investments in the capital market.

4. Mutual funds have lower investment thresholds

You don't need a lot of money to invest in  Mutual funds. They are relatively affordable when compared to investing in 10 different stocks. You can start investing in mutual funds, with as little as Rs 500 a month via SIPs, to achieve long-term equity benefits.

5. Mutual funds give transparency and safety


There is great transparency in mutual fund investments. You will get to know each and everything about your mutual fund investment, before getting into it. Information such as, who is your fund manager, rate of return the fund has given in the last 3-5 years, sectors where it has invested and transaction costs, all are known.

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Mutual funds are regulated by SEBI, so that means your investment is in safe hands.

6. Mutual Funds offer you liquidity


Mutual Funds are a very liquid form of investment. You can sell your mutual fund units whenever you want, to meet financial needs. As soon as you redeem your mutual fund investment, the amount will be credited to your bank account. Mutual funds are far better than other illiquid investments like real estate.

Mutual fund is a very good investment to meet your financial goals such as children's education, marriage, buying a home or saving for retirement. Mutual Funds generally give higher returns than inflation. Be Wise, Get Rich. 

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