Investing is a serious business that requires a lot of dedication and time to analyse the market and invest. Many people take chances and speculate; while some get lucky, others generally don’t. In this regard, a mutual fund proves to be quite advantageous.
Investing in mutual funds brings many advantages to an investor, which include:
Professional setup and management: Strong system and process and an experienced team adept at money management, considering risk, return, and liquidity aspects. Qualified professionals manage your money with a strong research team and resources.
Asset allocation and portfolio diversification: Diversification lowers an investor’s risk of loss by spreading money across various industries and geographic regions. It helps an investor to mitigate the risk to a large extent, thereby making the portfolio less impacted by sudden adverse events.
Cater to your investment needs: It helps an investor select from a large universe of mutual investment baskets based on his life stage and appetite for risk. For example, an individual at 30 years of age has some objectives like wealth creation, while an individual at 60 years of age has some other objectives like regular income and investment safety. Mutual funds have designed investment products to cater to and manage such needs according to scheme objectives.
No large investment compulsion: Mutual funds allow an investor to make an investment, even if they have Rs 500 to invest. This advantage proves to be attractive for investors.
The right time for investing in equities was yesterday; it is today, and it is going to be tomorrow as well. Many data points prove that equity investment is the best asset class for long-term investment. It stands out among all asset classes regarding outperformance relative to other assets in the long run. Therefore, it is always the right time for long-term investment in equities.
However, it is recommended for an investor not to track long-term investments daily as it encourages deviating from long-term investment goals if there is any sudden short-term gain.
If one wants to track the progress daily, then an investor can look at the Net Asset Value (NAV) of a particular scheme on the website of the Association of Mutual Funds in India (AMFI) or fund house.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.