Should You Invest in Mutual Funds?

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Mutual funds are one of the popular types of investment options available. Traditionally, Indians have the tendency to invest in such schemes that offer a guaranteed rate of returns such as fixed deposits, PPF and SCSS. They are considered as the safest investment but at the same time, they reap a lower rate of return as compared to other investments. Investment in Mutual Funds requires you to ascertain the safety of money. The company or institution where you invest money is the key factor. Here, we discuss about the key factors that you need to consider when it comes to mutual fund investment:

Are all Mutual Funds Same?
No, there are more than 7000 mutual funds being offered by different institutions and they come with different objectives. Some invest in stocks, some in bonds and some in other investments. The pool savings by a number of investors are managed by Asset Management Company and this money is then invested in securities according to the investment objective.

mutual funds


What are the Benefits of Mutual Funds Investment?
  • Investing in mutual funds is a simple task. There are no complex processes for the same and one can easily make investment as per the requirement.
  • SIP or Systematic Investment Plan is the highlight of Mutual Funds. You can choose to invest as low as Rs. 500 and enjoy good returns.
  • Mutual fund investments also come under the preview of Section 80C deductions where the maximum limit is Rs. 150000. Equity Linked Savings Scheme is one of the most popular one as it comes with shortest lock-in period of just three years.
What are the Things that You Need to Consider?
  • As a first time investor, you need to select the right type of fund. There are many different types of mutual funds and you should select a balanced or debt fund as a first time investment.
  • Though the potential to grow is higher in case of equity than debt but at the same time, equity is more risky. You should check the investment allocation that how much investment is made in equity and how much in debt.
  • It is very essential to check the lock-in period before you invest your money.
  • You should also check out how the fund has been performing during different time periods. This gives you an insight about the same and helps in short-listing.
You should always choose mutual funds that meet your preferences and help you achieve your goals.

We hope that you find this information useful. If you have any questions, feel free to ask us in the comments section below.

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