On Anant Chaturdashi, every town and city in the country reverberates with the chants of ‘Ganapati Bappa Morya’. Lord Ganesh, the remover of obstacles is taken on a beautiful parade before being immersed in water. Moreover as you immerse your [eco-friendly] Ganesh into the water, remember that He takes away only your ill-luck and not your dreams and goals. On this auspicious day, let’s discuss why investing in mutual funds is a great way to finance your future goals.
Here are the benefits of investing in mutual funds.
Investing in mutual funds is safe
The Securities Exchange Board of India [SEBI] regulates mutual funds in India. It monitors the fund houses and ensures that they are safe for investors. However, there is still a small possibility that a mutual fund scheme can shut down. In such cases, the fund pays you a sum based on your current Net Asset Value [NAV]. This means, your money is safe, and you will receive it. But it is important to know that mutual funds come with a varying degree of risk. So, if capital protection is a significant concern, you can consider investing in debt mutual funds or liquid funds.
Easy way to diversify your portfolio
One of the first lessons in investment is, ‘Don’t put all your eggs in one basket’. Your investment portfolio should be well diversified to minimize your risk exposure in the market. For example, if you are looking to invest in individual securities, carefully select a dozen stocks [or more] to balance the risk and return equation of your portfolio cautiously. It can be a long and tedious process [especially if you are a new investor]. On the other hand, you can simply invest in an index fund that tracks the Sensex or the Nifty 50. This way, you can gain exposure to the 50 best stocks in the market through a single fund.
Professional management
If you are working at a regular job, you may not have the time or expertise to analyze stocks or study market movements. In that case, mutual fund investments are a good choice for you because a professional fund manager manages your investments. The fund manager must ensure that your fund earns the required returns in a specified duration.
Invest in small amounts
Many people delay their investment journey because of the belief that a large amount of money is needed to invest. This widely believed myth needs to be dispelled, because mutual funds allow you to invest with limited amounts. Fund houses allow investors to begin investing through Systematic Investment Plans [SIPs] with as little as Rs. 1,000 per month. In some cases, the investment threshold is even lower at just Rs. 500. So if wealth creation is your goal, all you need is to select a fund and invest right away. You can increase the investment amount as your income rises over the years.
Transparency
Before you invest in a mutual fund, go through all the required information about the fund such as the fund’s past performance, list of the fund’s holdings, fund manager’s performance history and so on. In addition, you can also check the list of charges you have to pay. There are no hidden charges attached to a fund. This is why investing in mutual funds is smooth and transparent.
Conclusion
As an individual, you may have many goals you wish to achieve in your life. Whether they are short-term goals or long-term goals, mutual funds can help you attain your goals. Hence, on this Anant Chaturdashi, invoke the blessings of Lord Ganesh and start investing in mutual funds to create wealth and enjoy a great future.