Five Reasons You Should Invest in Mutual Funds

"Investing is laying out money now to get more money back in the future."- Warren Buffett

Mutual funds have become one of the most popular investment methods at the present time. Various reasons back up for its growing popularity. For the investors with the narrow know-how of investments, it provides a much safer path. It also equips those with a constraint of time and money to get into investment mode. There are numbers of options to choose such as exchange-traded funds, Systematic Investment Plan (SIP), Fixed Maturity Plans and Sectoral Funds.

Backed with all these advantages, Check out the top five reasons to invest in mutual fund

#1 Diversification

Mutual fund diversifies your investment portfolio. It cuts down the risks by spreading your investments in different sectors. For an individual investor, diversification can be a costly affair. The charges involved having stocks from various industries and bonds from various issuers add up to a significant amount. Suppose you (as an individual investor) are going to buy 20 stocks in more than one sector the commission itself would be too high to proceed.


Low-cost investment options make mutual funds a popular platform for the new investors. You can begin with as low investment as Rs. 500 in SIP. Do you have an even smaller budget? No problem, very recently Reliance Capital Mutual Fund has started a plan offering a minimum installment of Rs. 100. You can invest in that. When you compare mutual funds with other stock options, they prove to be too costly for naive investors.

Also, you (as a newbie investor) get to learn various investment strategies. The fund managers keep updating you all the associated information related to your investment. You are also at a peace of mind as SEBI regulates the mutual funds, making sure that your asset is safe and secure.

#3 Easy to Start

Thinking about how to start SIP investment? Well, it’s very easy. Systematic Investment Plan is readily available through different financial planning firms, banks, investment firms and credit unions. You can even go to the online portal and complete the process to begin your SIP investment. As simple that so no more postponing, start investing.

#4 Economies of Scale

With mutual funds you get the benefit of bulk size transaction. Your sum receives a kind of volume discount. It helps to invest in different sectors giving diversification to your investment. When you do it as individual investor, several hidden costs piles up to a significant amount.

#5 Liquidity

You can readily opt out any time in a short time period. You get the Net Asset Value (NAV) at the time of withdrawal in case of an open-ended investment. Whereas in a close-ended investment your assets are traded in the stock exchange. Thus, you and your assets are never locked in.

With all these benefits, you can boldly start your investment in mutual funds with confidence. It’s true that every form of investment has some risks. But, without risks (calculated risks) in life, it’s very tough to move ahead. Don’t let the fear of failing stop you from learning new things in life.