There are a lot of investment options available in India, and the only aim of most investors is to get sky-high returns in less time. With this being said, investors aren’t even ready to risk out their principal money at any cost in the journey of high returns. Well, there would be rarely such products in the market which would give both high-returns with fewer risks. But ideally speaking this statement can get true if you invest wisely through the right investment option.
But what can be that investment? And should you even consider it to be a primary investment option to achieve investment goals? I brainstormed for several months to find the right investment option for myself, keeping its long-term as well as short-term benefits in mind. After lots of research and talks with advisors, I took my call for investing in Mutual Funds.
With no further delays, here I am sharing a few reasons why I choose Mutual Funds to be my primary investment option, and why I recommend it to others too!
But what actually is Mutual Fund?
Mutual Fund is a vast term and quite difficult to explain in a statement or two, but simply it’s a professionally managed investment scheme or fund. These funds are usually managed by an asset management company. Hence, as an investor, you can invest in a diversified assortment of securities that are securely managed by professionals.
Basically, investors involve the pooled funds to purchase shares, bonds, and other financial securities. And based on the principal amount, these funds are further classified into money market funds, index funds, equity funds, fixed-income funds, hybrid funds, and many others.
So whatever your aim as an investor is, be it financial rewards, convenience, you can aim to get it all through Mutual Funds. But to help you understand better here are a few reasons you must look into.
Reasons why I chose to Invest In Mutual Fund Over Any Other Investment option
1. Aim for Higher Returns On Investment
As mentioned previously, one of the common aims of investors is to achieve a higher ROI on their investments. This is mainly because they want to save for future needs and even to beat inflation. Be it a long-term investment or a medium-term one, Mutual Funds can provide more prospects of having higher returns. This is because you are investing in a diverse range of industries and sectors. Investors can aim to get inflated-adjusted returns without putting in much effort and time.
2. Managed by Experts
Whether you are a beginner or you have a profound knowledge of investing, some kind of robust research is essential to do while any little investment. Having said this, Mutual Funds are managed by qualified and experienced fund managers, most of their investment decisions are backed by data. Hence you don’t have to invest a lot of time researching the market or economy. Conversely, the fund manager will even track all variables to help investors maximize their returns.
3. Ease of Monitoring and Investing
The best part about investing in Mutual Funds is you don’t need to have a heftier amount to start with. You can start a monthly SIP (systematic investment plan) from just a minimal amount of Rs. 500 per month. You can calculate the SIP that you would need to invest in order to achieve a particular goal in a specific time duration. Also, there are too many online platforms available online that allow users to start investing within a few clicks. In this way handling investments, statements, and accessing online portfolios get a lot easier. Users also get an option to set up automated bank debits for monthly investments and SIPs. Hence, they don’t have to worry much about manually investing every month.
4. Tax benefits and liquidity
As compared to other investment options, Mutual Funds provide higher liquidity by allowing withdrawals at any point in time. Funds are directly credited back to the bank account of investors whenever they choose to redeem them. But this doesn’t apply to close-ended Mutual Funds. Mutual Funds like ELSS (Equity-Linked Saving Scheme) also offer tax benefits apart from liquidity. This scheme is a type of diversified equity funds that has statutory lock-in of 3 years and allows users to grow investments and get tax exemptions under section 80C of the Income Tax Act, 1961 as per current tax laws.
Whatever the gains would be, it will be considered as a type of income only and is completely taxable. But, taxes on Mutual Funds vary on the holding period and type of Mutual Fund.
5. Built-in Diversification
One of the notable benefits of Mutual Funds is unlike other investment options, it allows users to create a balanced and diversified portfolio. Some parts of investment will offer long-term growth while giving equity exposure. At the same time, investors can manage their risks at a better pace because even if some stocks don’t perform well others will make up for the losses.
6. The best systematic withdrawal plan
Mutual Funds offer systematic withdrawal plans wherein users can set up how they want their investment to get transferred. For example, if the user invests 3 lakhs, he/she could withdraw money partially or monthly, whatever is ideal for them. In this way, they can aim to earn a regular income, even if they are retired. Moreover, they can even customize the cash flow making the investment option more convenient than others.
Keeping all the factors in mind I safely invested in L&T Mutual Fund! Contemplating why to invest in Mutual Funds is quite natural, but these six reasons would be more than enough to allay your concerns. Nowadays, the evolution of technology and the availability of too many Mutual Fund houses have made the investing process a lot easier. And if as an investor you are disciplined enough to understand the market and are willing to enjoy the risks, then you can possibly earn a hefty amount. Happy Investing!
Always have the habit of reading the scheme related documents before investing to understand the scheme type, investment patterns and the risk factors associated with particular investments and consult your financial advisor to understand the implication of any investment
Disclaimer: This information is for general information only and does not have regard to the particular needs of any specific person who may receive this information. L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates; does not guarantee/indicate any returns/and shall not be held liable for any loss, expenses, charges incurred by the recipient. The recipient should consult their legal, tax, and financial advisors before investing. The recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.