Posts Tagged: ‘Transparency Various’

Benefits of Mutual Funds Investment

May 22, 2014 Posted by admin

Being an investor, you would always like to have maximum returns on whatever you are investing, but you may not have required time to constantly study the stock market in order to keep a track of them. You will require a lot of time and knowledge in order to decide what to purchase and when to sell. Many people take a chance and speculate, where some of them get lucky, most of them don’t. Here comes the need of mutual funds. Mentioned below are some of the benefits of Mutual Funds:

Professional management:
Skilled professionals take care of your money, but they are not alone. Along with them they have a team for research that continuously analyses the performance and forecasts of different companies. They also choose appropriate investments to accomplish the objectives of the scheme. It is a continuous practice that takes time and expertise which will add value to your investment. Fund managers are the best people to handle your investments and get higher returns.

The saying, “don’t put all your eggs in one basket” actually applies to the concept of smart investing. Diversified investment gets down your risk of loss by scattering your money across diverse industries and different geographic regions. It is an exceptional incident when all stocks decline at the same point of time and in the same proportion. Sector funds scatter your investment across a single industry so they are less diversified and hence more unstable.

Variety of choice:
Mutual funds have a range of schemes that will be suitable to your needs over a lifetime. When you come in a new stage in your life, you just need to sit down with your financial advisor who will guide you to rearrange your portfolio to match your changed lifestyle.

Being a small investor, you may find that it is not affordable to purchase shares of big companies. Mutual funds usually buy and sell securities in large volumes which allow investors to benefit from less trading fees.

Benefits on Tax:
Investments done by investors for a period of 1 year or more are eligible for capital gains and will be taxed accordingly. Advantage of indexation is also applicable to these investments.

With open-end funds, you can convert in cash the all or part of your investment whenever you wish and get the current value of the shares.

Rupee-cost averaging:
In rupee-cost averaging, you invest a certain rupee amount at regular time periods regardless of the investment’s unit price. Consequently, your money purchases more units when the price is low and few units when the price is high. Rupee-cost averaging permits you to discipline yourself by investing every month or quarter rather than making irregular investments.

Various publications and rating agencies analyze the performance of mutual funds, which makes it easy for investors to compare these funds with another.

Regulation of SEBI:
All mutual funds are registered with SEBI (Securities Exchange Board of India). They foMutual fund investing requires complete information about the behavior of the market and the terms and conditions involved in the method of investing.

Mutual fund investing is the best way to make optimum profits by investing the hard-earned money. This method is in demand these days, as it provides maximum profits in the form of returns. However, the period of investment is always long. Mutual fund investing pattern has some of merits and demerits. Thus, you have to be aware of both positive as well as negative aspects before investing in mutual funds.

Knowledge related to the risk involved in this kind of investing may help the investor to plan and take care about the future requirements. As the investing period in the mutual fund investing method is long, it carries the equal weight of risk. Thus, it is important for the investor to plan the financial activities well in advance to the actual task of investing the capital. These are strategies related to the future requirements and finding the sources for the same.

Apart from this, it is essential to acquire the accurate information about the details of the method of investing. In order to obtain the right valid information, initially, there is a need to look for a reputed consultant or a fund management company. A leading fund management company or a popular investing advisor may be the best source for knowing the formalities related to mutual fund investing.

Moreover, these agencies may also enable the investor to get the right idea about the number of years that the investment is to be made. This decision requires proper research related to the present circumstances in the market.

The investor also needs to have a proper understanding about the maximum risk levels involved in Mutual Fund Investing method and have to predetermine the level of risk that he is willing to take. All these aspects require proper knowledge about the behavior of the market.

This information may be available from many sources such as the fund management company, individual finance advisor and even from Internet, where one can lot of information related to the subject.llow strict regulations which are made to protect investors.