If someone told you that there is an investment option that is managed by an expert, has an expert looking into it, and lets you get started with even a small amount, would you be interested? Mutual funds can offer you such advantages, and much more.
The popularity of mutual funds is on the rise. More and more people are keen to invest in them and for good reason. Even though mutual funds carry with them a factor of risk, the fact remains that the risk is actually mitigated as a result of the age old saying, “don't put all your eggs in the same basket.” An investment in mutual funds can be a turn into a very good investments since the returns that it provides can be very good while mitigating losses. Investors also don't need to be experts on the markets since these investments are made with the help of an army of experts who take the best call possible on where to invest. But these are just a few of the advantages of mutual funds. Great as they may be, one thing must always be remembered with mutual funds, and that is that they always carry the element of risk because they are investments that are linked to the markets
Mentioned below are a few advantages associated with mutual funds
Smart investment
The first thing to do would be to talk about risks. If you were to invest all your money in one industry and that industry failed, you'd lose a lot of money, but with mutual funds, such risks are mitigated by spreading the investments over various avenues, like stocks and bonds, to ensure that even if one generates losses the rest can control the amount you lose.
Choice of risk
Stay with talking about risk, mutual funds also offer a choice of low, medium and high risk funds. These are meant to satiate your appetite for risks. A high risk fund offers the highest returns but the losses will also be high where as a medium risk fun tends to balance risk with return a little better where as low risk funds carry the least risk of losses and, consequently, the least returns of the three too.
Investing in a variety of instruments
Imagine ordering a thaali at your favourite restaurant where you can eat a variety of different foods in one affordable package! Mutual funds also work in a similar way.
Mutual Funds invest in a wide range of securities. This diversification reduces the risk by limiting the effect of a possible decline in the value of any one security. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
Convenience
You can invest directly with the fund house or through your financial advisor. You get regular information on the value of your investments and portfolios of the schemes.
Professional Management
Mutual fund investments are managed by experienced and skilled professionals, who with the help of an investment research team, analyzes the performance & prospects of companies and selects suitable investments to achieve the objective of the scheme.
Easy access to your money
In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of repurchase through Mutual Funds at NAV related prices which some close-ended and interval schemes offer you on maturity of scheme or periodically, as the case maybe.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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