Advantages and Disadvantages of Mutual funds
Mutual funds are a great investment opportunity for the investors who have no time to look and research about the market and don’t want to risk the money by own research. Mutual funds history tells us that though there might be some loses in the mutual funds in the short term, in the long run, good mutual funds always gave consistent returns to the investors. These funds are managed by experts with long experience. In this article, we will make you understand all the advantages and disadvantages of Mutual funds in detail and also help you in deciding whether to invest or not.
Most of the investors invest in mutual funds without understanding the advantages and disadvantages of mutual funds. They invest in the funds just because all other people have suggested that they are a good investment. Investors like them are never worried about what the funds are and don’t know any details about the mutual funds.
But remember that it is your money you are investing in the mutual funds and it is important that you have to understand all the details before investing. it will help you in identifying the best investment opportunities and take decision with proper knowledge. Investing without knowledge will only make you a victim if the case of downfall in the prices.
Advantages – Understand all the Basics of Mutual Funds
- Mutual funds need no management and no need to worry about all the news in the stock markets. The funds are managed by an experienced professional who keeps updated with the market conditions and will continuously take the best possible decision in the interest of all the investors.
- When you are investing in the mutual fund you will be a part of a large fund which has the advantages of scale because of the size of the fund.
- With a very small investment in the fund, you can make use of diversification to different instruments.
- And comes the most important of all which is the liquidity. You can anytime exit from the mutual funds in case if the funds are not Tax saving which has a lock-in of 3 years. You can exit from the fund anytime in case of Open-ended and get your money. In case you want an investment which is easy to withdraw, then mutual funds are the best option.
Disadvantages – Understand all the Basics of Mutual Funds
- You have no control over the investment. The fund manager will take all the decisions and as an individual investor you have no say in the fund and you just have to see what the fund manager does with the money.
- there is no guarantee that the mutual funds will give you results. There are instances where mutual funds have given loses to investors.
- There are many costs that are involved in mutual funds such as the operational costs, the salaries of the professional and other charges like the exit load etc.
Bottom line – Understand all the Basics of Mutual Funds
Mutual funds are a great investment opportunity but it all depends on the type of financial goal one wanted to achieve from investing in the funds. So it is the investor who needs to carefully analyze what is that he wanted to achieve and then select the best suitable fund from the type of funds.
