Why should investors consider mutual funds over others

23 Jul

The Advantages of Mutual Funds

When we are making an consideration for the investment opportunities, the first and the foremost challenge is that almost every investor faces is an excess of options. From stocks, bonds, shares and to the right combination of two or more of these, though every option which presents its own set of challenges and benefits.

Why should investors consider mutual funds over others to achieve their investment goals?

Mutual Funds allow the investors to group in their money for a diversified selection of securities, which are managed by the professional fund manager.

Mutual Fund Benefits:

Beat the Inflation
Mutual Funds help the investors generate the better inflation-adjusted returns, without expenditure a lot of time and energy on it. While most of the people consider letting their savings ‘grow’ in a bank, they don’t consider that the inflation may be nibbling away its value.
Mutual Funds provide an ideal investment option to put your savings on a long-term inflation-adjusted growth so that the purchasing power of your hard-earned money does not plunge over the years.

Low Cost
Almost certainly the one of the biggest advantage for any investor is the low cost of investment that the mutual funds offer, as compared to the investing directly in the capital markets. Most of the stock options require significant capital, which may not be possible for young investors who are just in the preliminary absent.

Mutual Funds, on the other hand, are moderately less expensive. The advantage of the scale in brokerage and the fees translates to the lower costs for investors. Once can start with as low as Rs. 500 as major capital, which may not be possible for the young investors who are just starting out.

Liquidity
Investors have the advantage of getting their money back on time, in the case of open-ended schemes based on the Net Asset Value (NAV) at that time. In case your investment is close-ended, it can be traded in the stock exchange, as obtainable by some scheme.

Higher Return Potential
Based on average or long-term investment, mutual funds contain the possible to make a higher return, as you can spend on a varied variety of sectors and industries.

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