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Why should you invest in Mutual Funds?

When looking for investment opportunities, almost every investor finds it extremely challenging to choose from a plethora of options. One can choose from so many possibilities including stocks, bonds, shares, and money market securities, however, each one of these has its own set of challenges and benefits.

Mutual funds allow investors to pool in their money into different varieties of securities, managed by an experienced fund manager. You can choose from a variety of products such as exchange-traded funds, Fixed Maturity schemes, and Sectoral Funds amongst others.

So why should an investor choose to invest in mutual funds over other options to meet their investment goals? While investors are often advised to invest in mutual funds, there’s not much information on why or how to invest. In this article, we list the reasons why you should invest in Mutual Funds.

Experienced Fund Managers

Under the guidance of a dedicated team of research, investors are offered services by expert fund managers who take financial decisions depending on the performance and the availability of prospects in the market to meet the requirements of the mutual fund scheme.

Diversified Investments

Investors invest in a wide range of securities. As the saying goes 'Do not put all your eggs in one basket', it alleviates risks to a huge extent by allocating your investments in many different assets. As a mutual fund unit-holder, you will benefit from this diversification method. It proves to be a great investment opportunity for investors with a limited investment capital.

Low Cost

Most stock options require huge capital which is not easy for young investors who’ve just started investment planning. One of the biggest advantage for any investor is the low cost of investment that mutual funds offer. They are less expensive when compared to investing directly in capital markets.

Transparency

You are kept updated on a regular basis about the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme.

Liquidity

Investors have the benefit of receiving their money back quickly, with open-ended schemes depending on the Net Asset Value (NAV) at that point. In case of close-ended schemes, the investments can be traded in the stock exchange, and offered by some schemes.

Higher Return Potential

Based on the term of investment, be it short-term or long-term, mutual funds have the potential to produce a higher return with an option to invest in multiple range of sectors and industries.

Convenience

Mutual funds are the most suitable option for the ones considering an appropriate and time-saving opportunity. With choices for low investment amount, the ability to buy or sell them on any business day and a plethora of choices for allocation to meet investment goals and needs, an investor can freely pursue his everyday life while his investments earn for them.

Author's Box

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group, headquartered in Mumbai, India. Kotak Securities offers services such as share trading, derivatives trading, mutual funds, IPO, exchange traded funds, currency derivatives, tax-free bonds, portfolio management, stock lending and borrowing and interest rate futures.

Click here to get more information.

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