Why Invest in Mutual Funds
Every individual wants to save money and grow wealth, However, no one wants too much of risk but they also look at and maximizing returns. If lowering risk and maximizing returns is the criterion then mutual funds seems the logical way forward. Mutual fund is a professionally managed investment mechanism. Investments are managed by professional fund managers, supported by well qualified and experienced research team. A fund manager not only takes well informed decisions but also exercise aggressive decisions on entry and exit from a particular security or Industry. A retail investor can only pick a few stocks but a good fund can invest in excess of 100 stocks. And bring the number down as the market conditions change. A retail investor cannot have a low risk portfolio of balanced funds yet beat inflation but a good balanced fund has been doing this for several years.
Mutual Funds are highly regulated. Expense ratio, AMC fees, distribution commission is well defined and pro investors. Presence of a proactive regulator (Securities and exchange board of India) gives additional security to retail investors. This is unfortunately missing in some other asset classes such as real estate. SEBI ensures Mutual Funds provide full transparency, NAV's are declared on daily basis. This provides immense transparency and it is this transparency that is a prominent feature of any Mutual Fund.
Moreover, a retail investor can do so much more with a mutual fund investment. Systematic investment plans (SIP), systematic transfer plan (STP), Switch out from a debt fund to equity and vice versa, Systematic withdrawal plan (SWP), tax saving Mutual funds (ELSS) to save tax under sec 80 C. Mutual Funds is the way forward to meet one or more of your financial goals.