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Mutual Funds are financial
instruments. These funds are collective investments
which gather money from different investors to invest in
stocks, short-term money market financial instruments,
bonds and other securities and distribute the proceeds
as dividends. The Mutual Funds in India are handled by
Fund Managers, also referred as the portfolio managers.
The Securities Exchange Board of India regulates the
Mutual Funds in India. The unit value of the Mutual
Funds in India is known as net asset value per share (NAV).
The NAV is calculated on the total amount of the Mutual
Funds in India, by dividing it with the number of units
issued and outstanding units on daily basis.
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Benefits
of Investing in Mutual Funds
Any one who is aware of stock market is not new to
mutual funds. Mutual funds have gained in popularity
with the investing public especially in the last two
decades.
Following are some of the primary benefits.
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1.
Professional Financial Experts
Every Mutual Fund scheme has a well-defined objective
and behind every scheme, there is a dedicated team of
financial experts working in tandem with specialized
investment research team. These experts diligently and
judiciously study companies, their products and
performance, and after thorough analysis, they decide on
the best investment option most aptly suited to achieve
the schemes objective as well as investors financial
goals.
2. Diversifying Risk
It plays a very big part in the success of any
portfolio. Mutual funds invest in a broad range of
securities. This limits investment risk by reducing the
effect of a possible decline in the value of any one
security. Mutual fund unit-holders can benefit from
diversification techniques usually available only to
investors wealthy enough to buy significant positions in
a wide variety of securities.
3. Low Cost
Mutual Funds generally provide an opportunity to invest
with fewer funds as compared to other avenues in the
capital market. You can invest in a mutual fund with as
little as Rs. 5,000 and also have the option of
investing a little of Rs.500 every month in a SIP or
Systematic Investment Plan.
4. Liquidity
You can encash your money from a mutual fund on
immediate basis when compared with other forms of
savings like the public provident fund or National
Savings Scheme. You can withdraw or redeem money at the
Net Asset Value related prices in the open-end schemes.
In closed-end schemes, lock in period is mentioned,
investor cannot redeem his investment until that period.
5. Variety of Investment
There is no shortage of variety when investing in mutual
funds. There are funds that focus on blue-chip stocks,
technology stocks, bonds or a mix of stocks and bonds
and with due assistance from a financial expert, the
investor can choose a scheme that aptly fits his
requirements, and helps him achieve maximum
profitability. |
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