Mutual Funds: Your Way to a Secured Financial Future

Posted by Shaheen Shaikh on May 3rd, 2019

Mutual funds have become one of the primary investment options in these last few decades. They help people to make maximum use of the equity market and other financial sectors for investments. A mutual fund portfolio involves investments in the equity market, corporate or government bonds and short-term debt. Investing in mutual funds has become easier today. They are not much unlike the recurring and fixed deposits that can be done in banks.

How do mutual funds make your future secure?

Mutual funds have several features that make them more desirable than fixed-income deposits in the banks. Here’s why mutual funds can make your life more secure:

• Higher returns - Mutual funds offer a wonderful way for people to invest money. They offer superior returns than the traditional means of investment. The debt funds have always beaten the fixed deposits offered by the bank. Also, the interest rates offered by the banks are going down every day. This is when mutual funds can be a better option of investment. Most mutual funds would offer a growth rate of about 15% over a term of 10 years.

• Professional management - Mutual funds have professional fund managers, who are experts in the field of investment. They spend hours finding stocks and learning about the firms offering mutual funds. They know when to buy the stocks and when they can be sold. The fund managers analyze the performance of the companies and the funds. All the mutual funds are governed by SEBI and are transparent and secure. Delivering high returns is the job of the fund manager, and you can rely on them.

• Disciplined investing - Investing in mutual funds is more of a habit. The Systematic Investment Plans or SIPs can help you invest a certain amount on the same day of a month for a few years. This is a commitment and can grow into an excellent habit, which will help you to secure your future in the long run.

• Diversification - Mutual funds invest in a lot of different industrial and financial sectors. The money is invested in government bonds and short-term debts, along with the equity market. The investments are done in various asset classes and stocks, thus reducing the risk. The fund manager would be investing across a variety of stocks to minimize the risks. The sudden changes in the shares would be balanced out by the performance of the other stocks in the portfolio. However, to further reduce the risk, one should invest in multiple mutual funds.

• Convenient methods of investment - Investment in mutual funds have become very convenient today. You can do so online without leaving the comfort of your room. Lots of mobile apps also offer investment assistance.

Mutual funds are subject to market risks. Thus financial and market experts advise investors to start early to absorb risks at young age and have a longer period to balance their profit/loss and build a corpus for a secured financial future.