Mutual funds are basically for those who have goals in long future ie money is required in the future after 10-15 years. Mutual funds are useful for those who want long term gains and not the immediate returns. Generally it is said that mutual funds is a good source of investment for those investors who want minimum or no risk and want steady return after some time period.
Mutual funds are an indirect source of investment and are generally managed by a professional fund manager. Generally mutual funds collects money from the small investors and then invest that pool of money in some investments and provide returns to the investors after deducting their expenses and commission.
The various benefits of mutual funds are as follows:
1. The mutual funds are professionally managed and therefore investing in shell companies and fraud schemes are very less.
2. It is an indirect source of investment and thus investors donor own directly any assets of the company and therefore are not liable for anything.
3. It is beneficial for those investors who do not have large amount of money to invest and also do not possess high level of high skills and knowledge of stock market and funds.
4. Generally mutual funds are good from long term point of view and thus offer handsome returns in long term
5. There is ease in payment of mutual funds or ease to invest. As the money can be done invested through SIP. SIP is systematic investment plan under which the investor can invest in monthly installments and thus take the advantage of cost averaging.
6. There are various schemes in mutual funds where no load is to be paid ie no charges or expenses are deducted from the NAV (Net Asset Value)
7. Various schemes also offer tax incentives as well and thus help in reducing taxable income. Moreover a saving habit is created and monetary discipline also.
Thus it is advisable to invest in the mutual funds to earn handsome return in future. But read the schemes carefully before investing.