Mutual funds are right or wrong, should we invest in mutual funds? Can you really earn from mutual funds?
At present, mutual funds are considered to be the best option for investing. Till five years ago there was no craze for mutual funds in the market. But in the last two-three years, mutual funds have emerged very fast, due to which it has become the first choice of investors.
In earlier times, people used to invest only in fixed deposits, gold, and real estate in the name of investment. But now mutual funds have also made a place in this investment and their returns are also very good because of which investors also like them a lot.
But friends, many new investors also have this question of whether it is right to invest in mutual funds or whether mutual funds are right or wrong. So today you will get the solution to all these doubts in this article. We will talk in detail and explain to you whether mutual funds are right or wrong. So friends, stay tuned for this interesting article.
A Mutual Fund Is Good Or Bad
Most people in India consider the stock market as a gamble and they do not like to invest considering it as a speculative market. Similarly, mutual funds also depend entirely on the stock market. Because of this, people are afraid to invest in mutual funds as well.
If this question is also arising in your mind whether mutual funds are right or wrong, then this question of yours is valid. But friends, investing has become very important in today’s time. So we must find some alternative. So we try to understand point-wise whether a mutual fund is right or wrong.
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Saving habit
Most people shy away too much in the name of saving. They keep postponing savings every day. But we know very well that saving from today itself is very important to improve the future. So if you invest in mutual funds, then your best habit will be that you will automatically start saving.
Because SIP mode is such a way in which on a fixed date of every month your money is deducted from your bank and deposited in mutual funds. This inculcates the habit of saving and slowly starts building your wealth.
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Beginning of investment with less capital
Most of the investment options in the market are such that you need a lot of capital to start investing like real estate, and gold. But in mutual funds, you can start SIP with just ₹ 500. Even many fund houses can start SIP from ₹ 100 only.
In this, you need a minimal amount so that you can build your wealth little by little. This is the biggest plus positive of a mutual fund.
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Manage by experts
If you invest in mutual funds, your mutual fund portfolio is managed by experts. When you invest in the stock market on your own, your decisions can go wrong.
But the fund managers who handle your mutual fund investments are very expert and experienced. Because of this, the chances of their decisions being wrong are less. That’s why mutual funds make you good returns in the long term.
Due to the availability of the facility of a professional fund manager at a very low cost, mutual funds appear right in the confusion of whether mutual funds are right or wrong.
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Complete security of your money
Many investors are apprehensive about investing in mutual funds as they fear that someone might run away with their money. But friends, there is no need to panic about this.
Mutual fund companies are managed by agencies such as the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI). SEBI is also the regulator of this market.
SEBI grants licenses to those who fulfill all its terms and conditions. Mutual fund companies are licensed in the same way as banks are licensed by the RBI.
That’s why there is no question of running away with your money in this. Therefore, investing in mutual funds can be considered correct regarding this point.
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Highest returns and profits due to the power of compound interest
You will get an idea of whether a mutual fund is right or wrong by its returns. The returns of Mutual Funds can be 12 to 15% in the long term which is the highest among all other asset classes like Gold, Real Estate, PPF, and Fixed Deposits. That’s why mutual funds are right in terms of returns.
Secondly, in mutual funds, you get to see the benefit of the power of compounding. The longer you hold your investment, the faster the value of your investment will increase. Mutual funds are so popular because of the power of compounding.
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Diversified Investment
When you invest in mutual funds, it is not that you are investing in only one asset class. Investments in a mutual fund can be in debt funds or equity funds.
Equity mutual funds can also hold up to 40-50 stocks. Even if there is a loss in any one stock, the rest of the stocks cover your loss. That’s why there is diversity in investment here. Due to diversification, your risk is greatly reduced. So according to this also mutual funds can be considered correct.
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Easy to invest in mutual funds
Investing in mutual funds is very easy in today’s internet age. You can easily buy mutual funds directly from the mutual fund house’s website or through any mobile app.
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Investment at a very low cost
To invest in mutual funds, you have to pay the expense ratio as a cost, which is very low. You get the services of a professional fund manager at expense ratios of 1-2%. The fund manager manages your funds at such a low cost. That’s why mutual funds look even more attractive.
Mutual funds appear correct in the answer of true or false because of the low cost.
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Time-Saving
You can invest little by little every month through SIP in mutual funds. In this, your investment becomes automatic, in which money is automatically deducted from your bank account on a fixed date and deposited in the mutual fund. You don’t have to make any extra effort in this.
Due to this your time is also saved. Whereas if you invest in the stock market, you have to constantly keep an eye on the stock analysis and the company, which can be very time-consuming.
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Can withdraw money easily
Another reason why mutual funds are perfect is that you can easily withdraw your money from them. Most of the investment options have a lock-in period in which you cannot withdraw your money during that lock-in period.
But in mutual funds, you can withdraw your money whenever you want. In this, money is usually credited to your account in 3 to 4 days. Due to the liquidity, mutual funds are better than other options.
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Low Risk
Mutual funds carry less risk than stock market investments. This risk further reduces if you invest for the long term. So if you want to invest for the long term then you will definitely get profit in the future. Because the Indian stock market is going to grow in the future.
The risk is less due to investing in a lot of stocks and asset classes in mutual funds.
