Mutual fund investment plans are professionally managed financial
portfolios consisting of stocks, bonds, and securities. The mutual fund
investment portfolio is quickly becoming popular in India. Many people now are
looking to move away from passive sources of income.
In 2017, small-cap mutual funds provided 33% on average returns to
investors. If you are considering investing in mutual funds this year, here are
some of the benefits to consider.
1) High Rate of Returns
If you are looking to start small to test the waters, you should
consider investing in bond funds. These funds include investments like debt
instruments, corporate bonds, and government bonds. These funds come with the
most significant risk but also the highest returns. Now, you may say, ‘But,
hey, I don’t wish to lose my money.’ Then here's a tip – high-risk funds like
these are not meant for investing your savings, but for reducing your
expenditure on unnecessary items. It is for the investment that you would
unnecessarily spend anyways. Now, how does a 33% sound on Rs. 500 that you
would spend on perhaps buying a pack of cigarettes?
2) Flexibility
People often ignore how easy it has become to invest and gain returns on
mutual funds. You can use simple apps to create an account and invest as little
or as much as you like. Moreover, the best part of this flexibility is – you
can take out the funds anytime. As long you invest in open-ended funds like
debt funds, and equity funds, you can withdraw your money anytime.
3) Tax Benefits
Mutual funds that fall under equity-linked saving schemes or ELSSs
qualify for tax exemptions. These tax exemptions that fall under section 80C
can save investors as much as Rs. 1.5 lakhs. So, if you are afraid of the
government digging deep in your pockets, mutual funds can be the wise way to
go!
4) Risk Diversification
Since mutual fund investment in India is still relatively a new
phenomenon for most people, it seems risky to many. However, this is not
entirely true. Indeed, there is some amount of risk involved in mutual funds.
But, this risk completely changes depending on the funds you choose. For
example, the small-cap funds known for their high returns can show more
volatility. So, you can opt for large-cap funds that deliver slower returns but
promise more safety for your investments. To build the best mutual fund
portfolio, you need to find mutual funds investment plans that best meet your
financial goals and needs.
5) Financial Planning
Many smart investors set monetary goals like ‘I want to purchase a
two-wheeler three years down the row’ and invest accordingly. You can take out
the money anytime you want, but it is wiser to invest in the long run.
6) Board the Ship!
In 2018, the total size of the current mutual fund assets grew to Rs. 24
trillion. The year saw an uptake of over Rs. 3 trillion. Despite yearly
fluctuations, mutual fund investments in India will grow as for an average
salaried employee, and it is one of the best investment options.
7) Low Burden
Additionally, these investments can start for as low as Rs. 500. Even
young people can invest in these schemes to invest in dreams like a
two-wheeler, an amazing foreign adventure, or something else. Everyone should
consider investing early. This way, you can diversify your risk, experience
different routes to investments, and cultivate a balance that suits you
best.
Mutual funds will not help you become financially independent. However,
these schemes can be the stepping stones to live a carefree, happy, and
economically satisfying life for everyone.
