Benefits of Investing in Mutual Funds

Earlier we saw that investing through mutual funds can be more beneficial than directly investing in shares or fixed deposits.

How is a mutual fund more beneficial than investing directly in shares?

You need not whack your brains

Investing in shares may be Latin and Greek to you. Investing in shares requires knowledge and time. If you dont know to drive you appoint a driver! That's exactly the job a mutual fund does for you. They will do all the driving and you can sit back and enjoy the benefits of stock investing.

Flexibility

The minimum amount can be as low as Rs 500. You can invest in weekly/monthly/quarterly/yearly or on one time basis. In most of the mutual funds you can invest anytime and withdraw any time.

How is a mutual fund more beneficial than investing directly in fixed deposits?

Better returns

The returns in a mutual fund can be a bit higher than your bank savings/fixed deposit. Assume your bank fixed deposit is giving you 8% then you may end up making 8.5-8.75% in mutual funds. So if you have large sums lying in savings account or bank deposits you may end up earning lesser returns compared to mutual funds.

Tax efficient

In many cases you may end up paying lesser taxes by investing in mutual funds compared to the fixed deposits.



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