The advantages
of investing in a Mutual Fund are:
- Diversification: The best mutual funds design their portfolios so
individual investments will react differently to the same economic
conditions. For example, economic conditions like a rise in interest rates
may cause certain securities in a diversified portfolio to decrease in
value. Other securities in the portfolio will respond to the same economic
conditions by increasing in value. When a portfolio is balanced in this
way, the value of the overall portfolio should gradually increase over
time, even if some securities lose value.
- Professional Management:Most mutual funds pay topflight professionals to manage
their investments. These managers decide what securities the fund will buy
and sell.
- Regulatory oversight: Mutual funds are subject to many government regulations
that protect investors from fraud.
- Liquidity: It's easy to get your money out of a mutual fund. Write
a check, make a call, and you've got the cash.
- Convenience: You can usually buy mutual fund shares by mail, phone,
or over the Internet.
- Low cost: Mutual fund expenses are often no more than 1.5 percent
of your investment. Expenses for Index Funds are less than that, because
index funds are not actively managed. Instead, they automatically buy
stock in companies that are listed on a specific index
- Transparency
- Flexibility
- Choice
of schemes
- Tax
benefits
- Well
regulated