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The pros along with cons of mutual funds

By on August 4, 2019
mutual funds

Be it a first time investor or a seasoned campaigner, best mutual funds for tax saving is something that you need to add on to your investment portfolio. In spite of this you need to be aware of the advantages of this investment tool.  Let us flip through this investment tool and what are the basic advantages it provides

Liquidity

Till the point of time you choose close ended mutual funds, it is really easy to exit a scheme. It is possible to buy or sell units at any point of time and this is if the price is at a higher end. Do watch out for exit load or even pre exit penalty. The transactions associated with mutual funds happen only once in a day once the fund house releases the NAV.

Diversification

Mutual funds do have its own risk aspects as their performance is dependent upon market movement. For this reason the fund manager invests in more than a single asset class, equities, debts and other market instruments to streamline risks that are referred to as diversification. Suppose if a single asset class does not perform you can compensate it with the performance of the other asset types.

Expert management

Mutual fund is an obvious choice as you do not have to undertake a lot of research and spend time in asset allocation. The fund manager takes care of all aspects, even in relation to your decision about your investment. They decide whether you should be investing in debt or equities. They also decide when to hold them and how long you need to be keeping them. Here the expense ratio assumes a lot of significance as well.

For bulk transactions less cost

You would have taken into consideration, how with increase in volume price drops in relation to any product type. The logic associated with mutual funds is different. If you end up buying multiple units at a single time, commission charges and processing fees would be comparatively less when you end up purchasing a single unit.

Aligns with your financial goals

There are various types of mutual funds available in the market aligning with your financial goals. Whatever be your income you need to make it a point that you need to set a small amount, be it small towards investments. It would be fairly easy to locate a mutual fund matching with your income, risk appetite and investment goals.

Cost efficiency

There is an option, to opt for less expense ratio funds with zero loaded features. Just check out the expense ratio of various funds and figure out which suits your budgets and even financial goals. To manage your fund there is an expense ratio involved and you can compare the performance of the fund.

To conclude, the purchase of funds is a simple and painless procedure. Just start off with a single fund and slowly diversify. To maintain and regulate mutual funds is not going to take a lot of effort from your end. The role of the fund manager assumes importance.

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