7 reasons to invest in Mutual Funds

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 Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. AMFI Regn. No.: ARN-0845. PFRDA. We are distributors of Mutual funds. Please note that Mutual Fund Investments are subject to market risks, read the scheme related documents carefully before investing for full understanding and detail. I-Sec does not assure that the fund's objective will be achieved. Please note. NAV of the schemes may go up or down depending upon the factors and forces affecting the securities markets. Information mentioned herein is not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The information provided is not intended to be used by investors as the sole basis for investment decisions, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific investor. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. Investors should make independent judgment with regard suitability, profitability, and fitness of any product or service offered herein above. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.