Benefits of Mutual Funds for your Wealth Management

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Mutual funds were first presented to us more than two decades ago. At first, there was a lot of scepticism about using mutual funds as an instrument for financial planning. However, after constant education and awareness on the benefits of the mutual funds as the best investment plan, the psychology of the public has now changed and has now tilted in favour of mutual fund investment. There are many advantages associated with this form of investment and in this article, we will be outlining the highlighting benefits, helping you make a choice about where to invest money:

 

  1. Stress-free investment – Mutual funds are one of the most tension free investment options that you can come across. Though there is always a certain amount of risk that we need to be wary about, it is nothing that cannot be overcome with a little knowledge and precaution. An investor is only scared to invest his money if he is uncertain about the situation he is getting into. However, an induction into the world of mutual fund performance can clear all your anxiety and give you the confidence to start your financial planning with mutual funds. Also, the biggest advantage is that there are various certified Asset Management Companies that will put your investment under the expertise of a financial advisor, who will manage and advice you on your wealth management journey.
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  3. Freedom to diversify – The world of mutual funds offers an immense number of opportunities for you to diversify your investments. Through his method, you can ensure that you follow the golden rule of investment – not putting all your eggs in one basket. With access to the top performing mutual funds at the tip of your fingers, you have the luxury of re-aligning your assets as you please. This also ensures that in case you face some losses in an investment, due to market changes, it becomes negligible compared to the bulk of your returns, as your investments are spread out.
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  5. Tax benefits – Who doesn’t want to save on taxes? We all feel the burden every time we set aside a chunk of our hard-earned income, to pay as taxes. However, with tax saver mutual funds we can lessen the burden by saving a considerable amount. The best ELSS funds (Equity Linked Saving Scheme) are becoming increasingly popular amongst mutual fund investors due to its double advantage of saving taxes as well as providing mutual fund returns. Mutual funds that are held for twelve months or more are usually eligible as tax saving investments.
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  7. Liquid investment – For those who are worried that mutual fund investments will tie their money up, there are options available to counter the same. Your financial advisor can help you choose the right investment avenue for you. If your priority is to be able to redeem your money in case of any unforeseen emergency, you can invest your money in open-ended mutual funds which do not have any restrictions on entry or exit. The process of entry and exit is standardized for the same reason and can be completed in a fairly short amount of time. Think of it as a bank account that

     

  8. Transparency – When you are putting our money into a venture, you would like to know exactly where your money is, what it is being used for and the good that is coming out of it. Mutual fund investment is completely transparent and gives you access to analysing the dynamics of your money, as and when you please. If you are not yet well-versed with reading your mutual fund performance reports, take the help of your financial advisor. They will help you summarise and analyse your investment report and guide you in the next steps. Moreover, to ensure that your money is safe, several external agencies, publications and professionals constantly scrutinise the top performing mutual funds, which adds as a safety net.