One of the most prominent advantages of investing in mutual funds is diversification. It is the process of spreading a given investment over multiple assets classes. Diversification helps us create an assorted portfolio that segregates the headwinds experienced in various sectors. Money is invested in a mixture of assets according to one’s risk appetite.
A lot of investors do not have the time or resources to conduct their research and purchase individual stocks. This is where professional management becomes quite useful. Several people invest in mutual funds for the professional expertise it provides to one’s investments. A fund manager continuously monitors investments and adjusts the portfolio accordingly to meet its objectives. This professional management is one of the most important advantages of a mutual fund.
The tax benefits associated with a particular kind of mutual fund is perhaps what draws most investors to this investment vehicle. To encourage investments in mutual funds, the Government of India offers several tax benefits.
For e.g., investments in Equity-Linked Saving Schemes (ELSS) qualify for tax deduction under Section 80C of the Income Tax Act. One can invest up to Rs1.5 lakh in this instrument to avail a tax saving of approximately Rs46,800 (assuming the highest slab of income tax i.e. @30% plus health & education cess 4% excluding surcharge as applicable) on their taxable income. The only caveat here is that the instrument comes with a lock-in period of 3 years, which means that you would not be able to access the invested funds during this period.
One can easily sell mutual funds to meet their financial needs. Upon liquidation, the money is deposited in your bank account in few days. Additionally, there are mutual funds that provide faster disbursal. They are called funds having instant redemption facility, wherein the money is transferred to your bankon the same day.You can explore our ATM (All Time Money) facility in your Portfolio to reap the benefit of the same.
All investors aim to achieve a higher RoI by investing in financial instruments such as mutual funds to beat inflation and increase their wealth of the long-term. Mutual funds have greater prospects of potentially providing highreturns over time as one can invest in a diverse range of sectors and industries.
All mutual funds are regulated by the capital markets watchdog Securities and Exchange Board of India (SEBI). This means that all mutual fund houses are required to follow the various mandates as lay down by SEBI. This, in turn, protects the interests of the investors.
Moreover, SEBI makes it mandatory for all mutual funds to disclose their portfolios every month.
It is very easy to invest in mutual funds, i.e. you can do this either online or offline. You simply need to visit our Website (www.apexmoneyadvisory.com) website and submit the necessary documents to start on your investment journey.
Moreover, you can also visit your Office in person or Call us. Our specially trained executives will analyse your needs thoroughly and guide you accordingly. You have submit physical documents and sign physical forms to start investing in various mutual funds. This ease of investment makes mutual funds are preferable avenue.
Most importantly, investing in mutual funds is very affordable. For those who cannot earmark a significant portion of their earnings towards mutual funds, they can start investing with amounts as low as Rs.500 at predefined intervals. This is known as a Systematic Investment Plan or SIP.
On the contrary, if you have a significant chunk of money to invest, you can even make alumpsum in a mutual fund.
Many investors are confused which is better between above two investment methods.
If you are an investor with a small but regular amount of money available for investment, SIPs can be a more suitable investment option. For investors with a relatively high investment amount and risk tolerance, lump-sum investments may be more beneficial.
Here is an article on SIP vs Lumpsum which will help you understand which is a better of the two.
Most investors prefer periodic investments because of the benefits SIPs offer over lump-sum investments. Some of these are outlined below:
Since lump-sum investments are a bulk commitment, investors need to know when they are entering the market. Lump-sum investments are most beneficial when you invest during a market low. However, with SIPs, you have the chance to enter during different market cycles. Investors do not have to watch market movements as closely as they would for lump-sum investments.
As mentioned above, you can begin investing in SIPs with as little as Rs.500/- per month. On the other hand, lump-sum investments need at least Rs.1000/-, although most mutual funds in India set the lower limit at Rs.5000/-.
As SIP leads to mutual fund purchases during different market cycles, the cost per unit is averaged out over the overall investment horizon. More number of units are purchased during a market low, compensating for purchases made during a market high. This can help tide over market fluctuations and even out the cost. Units can then be sold when the market is performing well.
The interest earned on SIP investments are reinvested in the scheme. Here, the compounding effect helps generate greater returns.
SIPs can get you into the habit of saving frequently. Banks allow you to set up an automatic investment instruction at a frequency of your choice.