Benefits of investing in MFs

Liquidity

The most important benefit of investing in a MFs is that the investor can redeem the units at any point in time. Unlike fixed deposits, mutual funds have flexible withdrawal but factors like the pre-exit penalty and exit load should be taken into consideration.

Diversification

The value of an investment may not rise or fall in tandem. When the value of one investment is on the rise the value of another may be in decline. As a result, the portfolio’s overall performance has a lesser chance of being volatile.

Diversification reduces the risk involved in building a portfolio thereby further reducing the risk for an investor. As MFs consist of many securities, investor’s interests are safeguarded if there is a downfall in other securities so purchased.

 Flexibility to invest in smaller amounts 

Among other benefits of MFs, the most important benefit is its flexible nature. Investors need not put in a huge amount of money to invest in a MF. Investment can be as per the cash flow position.

If you draw a monthly salary then you can go for a Systematic Investment Plan (SIP). Through SIP a fixed amount is invested either monthly or quarterly as per your budget and convenience.

Accessibility – MFs are easy to buy

Mutual Funds are easily accessible and you can start investing and buy mutual funds from anywhere in the world. An Asset Management Companies (AMC) offers the funds and distributes through channels like:

• Brokerage Firms
• Registrars like Karvy and CAMS
• AMC’S themselves
• Online Mutual Fund Investment Platforms
• Agents and Banks

This factor makes mutual funds universally available and easily accessible. More so, you do not require a Demat Account to invest in Mutual Funds.