Advantages of Mutual Funds

Mutual Funds are very popular this days, because of their advantages. There are many advantages of Mutual Funds. We can see it as follows :

1. Expert Management :

Mutual Fund Portfolio is managed by Expert Fund Manager. You just have to invest in Mutual Fund. Rest things are managed by Fund Manager. He knows very well, when to invest, where to invest and when to exit. 

2. Diversification :

When you invest in Mutual Funds, you get the benefit of diversification. Your money invested in many stocks or other securities. This reduces risk. 

3. Liquidity :

You can easily redeem your Mutual Funds units totally or partially at any time. You will get your amount redeemed within 2 to 3 working days in your bank account. In case of a liquid fund, the amount will be credited the next working day. Some AMCs in India provides Insta Redemption Facility. In this facility, the redemption amount is credited within 5 to 15 minutes of the online request.

4. Flexibility :

Mutual Fund Plans are very flexible. You can invest monthly through SIP or you can invest one-time Lumpsum. You can redeem all amount or part thereof. You can stop your SIP, or reduce it or increase it. 

5. Accessibility :

Mutual Funds are easily accessible. You can invest in Mutual Funds online or through broker or banks or directly from AMC etc. You can start your investment at a minimum of Rs. 100 per month. You just need the Pan Card and Address Proof to start an investment

6. Regulation :

In India, mutual funds are registered with SEBI. AMCs has to follow guidelines and regulation created by SEBI. Hence AMC can not misuse investors money.

7. Tax Savings : 

You can save tax by investing in Tax Saving Schemes of Mutual Fund. The Lock-in period is very less i.e. 3 years as compared to PPF / NSC / FDs etc. Long Term Capital gain up to Rs. 1 Lakh in a year is also tax-free. 

These are some advantages of Mutual Fund. In our next article, we will discuss the disadvantages of Mutual Funds.