. Liquidity and
Flexibility: When an investor invests in open-ended mutual funds, they can
easily redeem their investment anytime by selling their units and get the
intrinsic value. This provides the ability to get in and out of mutual funds
with relative ease. Investors can easily transfer their holdings from one
scheme to other, get updated market information and so on. Funds also offer
additional benefits like regular investment and regular withdrawal options.
Management: When you buy a mutual fund, you are also choosing a professional
money manager who has the education, skills, and resources to research diverse
investment opportunities. This manager will use the money that you invest to
buy and sell stocks that he or she has carefully researched. Therefore, rather
than having to thoroughly research every investment before you decide to buy or
sell, you have a mutual fund’s money manager to handle it for you. They will
also monitor performance and make adjustments to the changing economic market
3. Tax Saving
Benefits: Mutual funds can be tax-efficient investment avenues that can help
reduce your tax burden and at the same time increase your wealth. ELSS –
(Equity Linked Savings Schemes) – An Ideal Tax-saving Instrument offers an easy
option to obtain tax benefits and an opportunity to harness the potential
upside of investing in the equity market. Dividends declared under the ELSS
scheme during the investment period are tax-free. The profits from the sale of
ELSS units are treated as long-term capital gains and are not subject to tax.
This results in providing increased saving habit among investors.
Most mutual funds set a relatively low dollar amount for initial investment and
subsequent purchases. A mutual fund account can be opened, through your
Financial Advisor, with a relatively small amount of money to make it easier to
get started. Also, you can arrange to make low pre-authorized monthly payments
to your account so you can keep investing.