Advantages or the benefit of investing in mutual funds.

Here in this post I would like to discuss briefly on the advantages or the benefit of investing in mutual funds.

Affordability:
Anybody on this earth can afford mutual funds. An investor can purchase minimum for a sum of Rs.1000.00, that the highlight.

Professional Management:
it’s a mind-boggling thing when it comes to decide on what securities to buy, how much to buy and when to sell. However if you are buying a mutual fund, you acquire a professional fund manager who manages your money on your behalf. These fund managers takes these decisions after doing adequate research on the economy, industries and companies, before buying stocks or bonds. Most mutual fund companies charge a small fee for providing this service which is called the management fee.

Diversification:
According to financial theory, you got to invest in several securities spread across, so that you can reduce the risk substantially. A mutual fund is able to diversify more easily than an average investor across several companies; where as an ordinary investor may not be able to do.

Liquidity:
Unlike several other forms of savings like the public provident fund or National Savings Scheme, you can withdraw your money from a mutual fund on immediate basis.

Tax Benefits:
Mutual funds have historically been more efficient from the tax point of view. A debt fund pays a dividend distribution tax of 12.5 per cent before distributing dividend to an individual investor or an HUF, whereas it is 20 per cent for all other entities. There is no dividend tax on dividends from an equity fund for individual investor.