Benefits of
Investing in Mutual Funds in India

 

(Photo: Bank Bazar)

Investment in any form is considered to be the best
way of achieving additional income. It’s like waiting for an extra reward. One
such word with which we all are familiar is “equity mutual funds”.
There’s a large structural growth in equity mutual funds for Indian
industries.  The Indian Mutual Fund
AUM/GDP ratio currently stands at 12% vis-à-vis the global average of 60%.

India has seen a significant growth rate in equity
mutual funds investment. Indian investors are usually keen on investing in equity
mutual funds because of the risk management. Investing in mutual funds has
many advantages. Let’s discuss them briefly. 

•       Return:  Mutual funds involves higher
  risk but generally the return that it gives is greater than in any other
  investment plan.
• Ø 
  Professional Management: Even a
  person who does not have professional knowledge can invest. They are assured by
  the experts. The experts manage and operate mutual funds. They allocate it in
  different securities thereby assuring them profit.
• Ø 
  Flexibility in Investment amount:
  There’s no fixed amount to be invested. You can invest even with a minimal
  amount of Rs 100. This is the most important benefit which the investors get in
  equity mutual funds.
• Ø 
  Liquidity: This is also another
  benefit of investing in mutual funds. It’s not like fixed deposit where you are
  unable to withdraw amount at any point. You can redeem it at any point. Mutual
  funds have flexible withdrawal.
• Ø 
  Safety & Transparency: All the equity
  mutual funds have now become safe and transparent after the introduction of
  SEBI guidelines. They’ve a color coding through which the investors can assess
  the risk level.
• Ø 
  Diversification: Diversification is another factor
  which reduces the risk involved in building a portfolio.  Mutual Funds consist of many securities, so investor’s
  interests are safeguarded if there is a downfall in other securities purchased.
• Ø 
  Accessibility:
  Mutual Funds are easily accessible. By accessibility, it means that you can buy mutual funds from anywhere in the world. You don’t require a Demat account
  for it. Mutual funds are very easy to buy.
• Ø 
  Lower
  cost: In Mutual Fund, funds are collected from many investors, and then the
  same is used to purchase securities. These funds are however invested in assets
  which therefore helps one save on transaction and lower its cost. Investors get
  the savings as lower costs of investing in Mutual Funds.

Mutual Fund is
a strong financial tool which has helped in increasing the growth of Indian
economy. Mutual Fund have provided financial stability to the Indian economy. The
Indian capital market has been increasing significantly during last few years.
With the Industrial revolution and reforms of financial sector, the economy has
been opened up and many developments have been taking place in the Indian money
market and capital market. In order to help the small investors, mutual fund
industry has come to occupy an important place in the Indian market.

Although there are many benefits of investing in
mutual funds in India, but we must remember that every good thing comes with
some flaws. The market condition is very dynamic. Not anyone can invest in
mutual funds. One needs to have a proper knowledge to do that.  However, one thing which is certain is that
there’s no harm in it. India still has many steps to climb.