Expanding your assets is a great way to ensure financial stability and independence. One way of doing so is investing your money in the right place. There are various ways you can invest your money and earn great returns. One such way is investing in Mutual Funds. As nobody is interested in mediocrity, you need proper research to find the best mutual funds to invest in. Read further to know more about Mutual Funds and its features.
Mutual Funds:
A Mutual fund is a financial vehicle that is one of a kind. A Mutual Fund is formed when capital is collected from several investors and is further used to purchase company shares, stocks, or bonds. Professional money managers are involved in operating mutual funds who allocate the fund’s asset in order to gain profit for the investors. Gain or loss incurred is then proportionally distributed among the shareholders.
When you buy a unit of a mutual fund, you are buying a part of the portfolio’s value. When an investor buys certain stocks of a company, he/she is buying a part of the company’s ownership. Similarly, when you invest in a mutual fund, you are buying partial ownership of Mutual Fund Company and its assets.
Why invest in Mutual Funds?
Investing in mutual funds is the easiest way of growing your wealth and it has many benefits. Some of these benefits are:
- Higher returns:
Investing in Mutual Funds gives you an opportunity of earning higher returns. This is because returns on Mutual funds are directly related to the market’s performance. If the market performs exceedingly well, the profits/returns will be high.
- Tax Benefits:
You can invest in the Equity Linked Savings Scheme and can claim a tax deduction of up to Rs 1.5 Lakh. Eligible under Section 80C of Income-tax Act, this scheme comes with a lock-in period of 3 years which means you can withdraw this money only after 3 years. You can also earn some tax benefits by investing in debt mutual funds. Unlike other types of mutual funds, only returns earned over and above the inflation rate are subject to tax.
- Diversification:
Investment in only a single asset can be risky if the market crashes. This problem can be solved by diversifying your portfolio and investing in different asset classes. In the case of stock markets, diversifying is a lengthy process as you have to select at least 10 different stocks from different sectors. But when you invest in Mutual funds, you achieve in diversification easily, which reduces your risk to a large extent.
Motilal Oswal is one of the fastest-growing Asset Management Companies in India and offers a plethora of best mutual funds to invest in. They provide various equity-oriented investment products suitable for all your needs. Their share investment app lets you invest in mutual funds to earn great returns.