Mutual funds are currently a popular investment choice and you should consider buying them due to several important reasons. Some of them are listed below:
Professional Management: Not everyone is well-versed with stock markets. The fund managers do the required research on your behalf. They select the securities to invest in and also monitors their performance.
Diversification: Mutual funds allow you to buy a bit of all kind of investments. This is possible because your investment is combined with money from other investors, which is then put into a pool of investments. Hence, the portfolio of the investor gets diversified via a single mutual fund investment. Otherwise, you’d have to own individual stocks or bonds.
Affordability: Most mutual funds have a pretty low minimum investment amount. You can purchase a mutual fund at an amount as low as INR 500/ month if you opt for best SIP plans.
Liquidity: If you have invested in mutual funds, then you can easily redeem your shares at any point of point for the current NAV plus the redemption fees (if any).
Wide variety to choose from: Mutual funds have something for everybody. Everybody’s needs are different and you’ll surely find something that suits your needs. A young investor can take greater risk and so they can invest in an equity fund.