What It Means
Mutual Funds pool in money from many investors like you to buy stocks, bonds, short-term money market instruments, and more.
For the vast majority of investors, mutual funds are a preferred route to access the equity markets.
But mutual funds are not only about equity markets. They also provide access to a variety of markets such as debt, gold, real estate and global markets.
How It Benefits You
There are numerous benefits of investing through mutual funds.
Lower Risks: Mutual funds invest in a number of companies across a broad range of industries and sectors. You thereby reduce your risks by not putting all your eggs in one basket. This diversification is achieved with far less money than by doing it on your own.
Returns: Mutual funds have the potential to provide a higher return, over medium to long term, as they invest in a diversified basket of selected securities.
Affordable and Easy Access: Mutual Funds give you the ability to participate in investments that may otherwise be available only to larger investors.
Daily Liquidity: You can withdraw money any time by a simple redemption request.
Tax efficiency: The government offers many tax incentives for investing in mutual funds. These inculcate the habit of saving, and provide an impetus to the capital market.
Transparency: You are provided with regular and detailed information about your investments.
Regulation: The mutual fund industry in India is strongly regulated, thus ensuring the protection of your interests.