Here are the Top 5 advantages of investing in Mutual Funds
When you invest your hard earned money in mutual funds then before investing it is good to know that what are the benefits and drawbacks of investing in mutual funds and if you want to know the same then you came to the right place.
1. Your money is managed by experts
You can’t be an expert in all sector. It may be true that you are good at some skill or at your Job skill but you can not be so good at all thing and this is why we need the expert in other fields to make the task easily done with the help of experts same way here money management expert are there which will manage your money on your behalf.
When you invest your money in mutual funds then you will not get the fix returns on your money the reason is your money will be invested in the stock market in an organized and managed order to minimize the risk and to maximize the profit and all this for a small fee.
If you are good at money management and stock market investing then you can purchase the stock on your own but more than 90% are not good at money management and this is why rich people are only 1% of the earth population.
So, it’s a good decision to let do the expert their work.
2. You can invest in small amounts
Majority of people are poor and having a net worth of less than $1 Million dollars and this is because they think that in order to do investment they need a large sum of money for investing like in Real Estate Investing.
But it is not true in case of Mutual Funds and it is one of the best advantages of mutual funds where you can start investing from as low as Rs. 500/-
There is a tale “bund bund se ghara bharta hai” and same is true here.
with the help of small regular investment and power of compounding, there is a way of guaranteed becoming rich and the same principle has been used by the Warren Buffett.
3. High Liquidity
Having an Emergency and need your money back right now then no problem get your money back anything within 1-2 days.
This is also one of the best advantages of mutual fund investing over real Estate investing. Sometimes I wonder why people do Real Estate Investing. I know Real Estate Investing is also necessary but only up to 10-15% of your total net worth only.
There are also some disadvantages of high liquidity i.e there is a high chance that you will spend your money on buying anything if there is high liquidity.
But if you have control on yourself then my suggestion is to go with the mutual funds because you will get higher returns with high liquidity and high liquidity means you will get your money back very quickly whenever you need it and this is one of the most important things for the majority of people.
4. High Return
If you want high liquidity and with high return then Mutual fund is the one and only option because if you compare mutual fund with other high liquidity option like Fixed deposit then you can see that in case of FD you will get only 8% per annum interest and it is very low if inflation is in your country.
We know that high return comes at the cost of risk but in case of the mutual fund, you will get all three i.e High return with high liquidity and less risk in comparison with other option because your money will be managed by experts.
5. Diversified Portfolio
Whether you buy single Nav of the mutual fund will all your money still your money is diversified in the different sector because Mutual fund is not the combination of single stock of even single sector.
Your money is diversified as soon as you buy the Nav of the Mutual fund.
So no need of taking tension of diversification. All your egg will be in the different bucket and good bucket 🙂