The benefits of investing in mutual funds are as follows –
Access to professional money managers – Your money is managed by experienced fund managers using advanced scientific and mathematical techniques.
Diversification -Mutual funds aim to reduce the volatility of returns through diversification by investing in a number of companies across a broad section of industries and sectors. It prevents an investor from putting “all eggs in one basket”. This inherently minimizes risk. Thus with a small investible surplus an investor can achieve diversification that would have otherwise not been possible.
Liquidity – Open-ended mutual funds are priced daily and are always willing to buy back units from investors. This mean that investors can sell their holdings in mutual fund investments anytime without worrying about finding a buyer at the right price. In the case of other investment avenues such as stocks and bonds, buyers are not necessarily available and therefore these investment avenues are less liquid compared to open-ended schemes of mutual funds.