Indians have invested in bank fixed deposits, gold, and real estate for decades. However, in recent times, mutual funds have developed as a feasibly superior substitute for investment preference because mutual funds enable you to earn greater returns as compared to these traditional investment methods. Mutual funds also provide liquidity, easy admission, liquidity, added straightforward exits, and eliminate investment managing hazards from the single investors as qualified fund executives manage them.
What are mutual funds?
A mutual fund is a kind of monetary vehicle that pools money from depositors and invests in gold, bonds, stocks, equities, government securities, and other assets. The collective holdings of the mutual funds are identified as its portfolio. Investors purchase shares in mutual funds, and each segment of the share signifies a depositor’s possession of the deposit and the revenue it generates.
Mutual funds are managed by expert fund managers, who manage and analyse the investments made by the investors and also take care of when and where to invest. They allocate the fund’s resources and attempt to yield profits or income for the investors. A company’s mutual funds portfolio is organised and preserved to match the investment goals stated in its catalogue.
For managing the assets, mutual funds charge an annual fee known as the expense ratio to the investors. The fee is not fixed and differs from one mutual fund to another. SEBI (Securities and Exchange Board of India) has released the total limit of the expense fee that can be charged considering the overall resources of the fund.
Why do people invest in mutual funds?
Mutual funds are a popular choice among retail investors because they usually provide the following benefits:
● Specialised Management– Mutual funds are managed by skilled and qualified fund managers who possess the required experience, resources, and expertise to actively research, sell, purchase and manage investments. They do all the research for you and carefully select where and when to invest. A fund manager constantly tracks investments and readjusts the portfolio accordingly to align with the system’s objectives.
● The advantage of Diversification– Mutual funds don’t just invest in one company but in a wide range of industries and businesses. This helps to reduce the risk of incurring a huge loss if one company fails. It also increases the portfolio’s returns.
● Cost-effectiveness– Most mutual funds set a relatively low price for primary investments and consequent purchases. However, mutual funds purchase and sell huge amounts of securities; the business transaction costs are lesser than other individual security dealings.
● Easy access or Liquidity – Mutual Funds can be purchased and sold with ease, making them ideally liquid funds. Also, considering types of assets, mutual funds are often the most reasonable way of smart investment. Mutual fund stockholders can easily redeem their investments at any interval for the present net asset value (NAV), including redemption fees.
● Transparency in holdings– Mutual funds are subject to industry rule that warrants responsibility and impartiality to investors. Every mutual fund contains a System Data Document readily available on the company’s website that can provide you with all the information about its various holdings, a detailed report on the fund manager, etc.
The best mutual fund apps for investing smarter
Mutual Funds are a smart way to invest and raise your money. They can help you accomplish your monetary goals as they can produce greater returns. To invest smartly, you need to choose smarter too. Mutual fund apps are a boon for investors, and these apps enable flexibility to connect and invest from anywhere. Take a look at some of the advantages of using mutual funds apps to invest wisely:
1. Unified benefits– With mutual fund apps like ET Money, you can monitor the market, surf through various schemes, and based on their performance, you can choose one that works best for you. You can easily invest through your mobile with no hassle of paperwork. These apps are free and have no hidden broker fees. These mutual fund apps are easy to use, consisting of a completely computerized network. Therefore, these investment apps are a one-stop solution for your investment needs.
2. Easy access– You can invest in mutual fund apps anywhere with ease and at any time. Accessibility is a benefit of mutual fund apps that attract more investors daily.
3. Stay updated– Suppose you are sceptical about which fund is ideal for you. In that case, a good mutual fund app like ET Money can help you assess all fund-related data that with a unique rank to help you to make an informed choice and invest wisely.