7 reasons to invest in Mutual Funds

25 Jan 2021|

2 min read |

by ICICI Securities Team

A mutual fund pools in money from various investors and invests it in various types of underlying securities. They prove to be a great investment tool for growing ones’ wealth. Irrespective of your risk appetite and investment horizon, there is a mutual fund for everyone. However, investing in mutual funds for the wrong reasons can result in a bad investment.

So, here are seven reasons to invest in mutual funds.

1. You can start small:

You can start investing in mutual funds with as little as INR 100. Even if you don't have a sizeable chunk of money for investment, you can still start your investment journey through SIPs. Not only will this ensure significant returns but will also help instill the habit of investing.

2. You don’t need to manage everything yourself:

If you thought investing in mutual funds requires you to manage everything on your own; then you’re wrong. Professional fund managers are the ones who manage mutual funds. They analyze the performance of various securities in the market and decide which security should be bought or sold. Once you put in your investment amount, you don't have to think about how further investments are made with the pooled in money.

3. You don’t have to worry about the safety of a mutual fund:

The Securities and Exchange Board of India (SEBI) strictly regulates mutual funds. Every mutual fund has to obtain a SEBI registration before launching any scheme in the market. So, you do not need to worry about fund house disappearing with your money. However, standard risks associated with equities and debt apply for MFs as well.

4. You can enjoy tax benefits:

Who doesn’t like to save on taxes? Equity mutual fund schemes such as Equity Linked Saving Scheme (ELSS) offer a deduction up to Rs. 1.5 lakh in a financial year under Section 80C of the Income Tax act. ELSS is an equity mutual fund that invests in the shares of different companies. You don't have to pay any tax on the capital gains on units of an equity mutual fund held for more than one year, if gains are less than one lakh in a financial year.

5. You can enjoy instant liquidity:

If you face an unexpected financial crisis or the mutual fund scheme is underperforming, you can redeem the mutual fund units. You will receive the redemption amount in the linked bank account usually within one to three working days, depending on the type of mutual funds.

6. It helps diversify your investments:

Investing the entire corpus in a single asset or security can be risky. Mutual Funds allow you to diversify your investments by investing in different asset classes and securities. Therefore, even if the market crashes, your risk can be minimized to a large extent.

7. You can review the past performance before investing:

Historical performances can help you know how a fund has fared so far. You can use the information to locate a fund that has a lower risk profile but offers good returns. But do remember that the past performance cannot be a guarantee for future performance.

Mutual funds have become a household name when it comes to personal finance. There are several types of mutual fund schemes in the market that are tailored to suit your requirements. So, kick start your investment journey today and unlock the world of mutual funds.

Disclaimer

ICICI Securities Limited has its registered office at ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. The non-broking products / services like iLearn and Financial Learning are not exchange traded products / services and ICICI Securities Ltd. is just acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. iLearn is not an exchange traded product/service of ICICI Securities Ltd. All disputes with respect to the activity on the platform would not have access to Exchange investor redressal or Arbitration mechanism.

ICICI Securities Ltd. is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. ICICI Securities Ltd. is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990. Name of the Compliance officer (broking): Mr. Atul Agrawal, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. ICICI Securities Ltd. and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory. AMFI Regn. No.: ARN-0845. PFRDA registration numbers: POP no -05092018. ICICI Securities Ltd. acts as a Composite Corporate agent having registration number -CA0113. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund, Corporate Fixed Deposits, Bonds, Alternate investment funds, Tax planning, Succession planning, NPS, IPO, Investment Advisory and Loans related services are not Exchange traded products and ICICI Securities Ltd. is acting as a distributor to solicit these products. Please note, Insurance related services are not Exchange traded products and ICICI Securities Ltd. is acting as a corporate agent to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The non-broking products / services like Research, etc. are not exchange traded products / services and all disputes with respect to such activities would not have access to Exchange investor redressal or Arbitration mechanism. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.