However, you can hold your portfolio with small amount. You can start your investment with 2000 rs only. You will get better returns than managing on his own. And also need to look into research reports. Meanwhile, you can reduce risk by diversify of funds. Probably, you can share losses with other investors. You can check risk of mutual funds.
What are the advantages of Mutual funds.
Apart of this, you will get benefit of scale of economies. Because, funds will pay lesser cost with high volumes. Moreover, you can reduce their transaction costs. Apart of this you can chose the fund. Based on their risk and expected returns.
However, you unable to sell shares directly, easily and quickly. When you invest in Mutual funds you can cash anytime. Because, if it is open ended fund. You can sell units to funds to get good value. And if it is closed ended fund you can sell units in market. Check how mutual funds work.
Your holding can be transfer from one scheme to other. To get information on updated market. Moreover, funds offer additional benefits like investment and withdrawal options. It is also flexible and convenient to you to invest in MF. You will receive regular information on funds.
Mutual fund gives you best of both worlds. And this money is managed by professional fund managers. Therefore, money is transfer in diversified portfolio. It helps to pick benefit of returns by portfolio. You can also invest in various companies with small investment. You can check features of mutual fund.
In addition, you can enter and exit schemes anytime you want. Hence, every month you can invest in SIP. Your amount will be automatically goes out in savings account. Of course, you can select scheme by your choice. Probably, you may face difficult to exit. Due to no buyers in market. But in case of mutual fund you don’t have problem. You can read more advantages of Mutual fund.
First of all, you can see more AMCs in market. You will receive every day new products report. Hence, you can invest in limited funds only. If you invest in more number of stocks will increase risk. Usually, fund invests in companies across wide range of industries. So risk is diversified. Check on dividends.
Finally, mutual funds regularly provide you with information on value. And also provide complete portfolio of investments made by various schemes. You can pick up scheme depending on your risk. Because, all mutual funds are registered with SEBI.
What are disadvantages of Mutual funds.
However, you can see MF price changes due to fluctuations. Therefore, you will not get any guarantee on certain returns. Moreover, you need to pay investment management fees. As long as you remains with fund. You cannot control over costs. Check fund manager achievements.
In addition, you need to pay for funds distribution charges. But these charges will not incur in direct investments. First of all, they will pay salaries and marketing expenses before investors. You need to watch out such management fees. In most of cases you have to pay management, sales and any other fees. So if you need very low risk and good returns. It’s better to invest in more banking products.
In fact, you may study that show higher fees to lower performance. You may find there are two different mutual funds. One allows you to go in and out at anytime. Probably, other mutual fund is locked in for 5 to 7 years. If you try to take your money in locked fund you will charged. Make sure to ask your advisor which type you are investing in.
If you wants to include specific stocks and bonds in portfolio. Mutual funds are not a suitable solution for you. Because, it consider successful investment vehicles. So they spread management costs to all portfolios. Therefore, they cannot satisfy you on trading specific share or bonds. Study history of companies.
However, if you have high level of capital to invest. Mutual funds do not provide you with flexible that you need. It takes 3 to 6 days to sell units. And money to flow back to you account. In some cases, stock index may outperform mutual fund. Therefore, it is good idea to do your research before investing in fund.
In addition, you have to pay taxes, transaction fees to maintain fund. In other hand, fees are charges will depend on type of MF purchased. If historical data tells that it continuously underperformed compared to index. Then it is not wise investment. Check on Benefits of diversification.
Finally, you need to find mutual fund with guaranteed return. Because, all assets carry some risk. However, some mutual funds will carry higher level of risk than others. Mutual funds need to maintain assets in cash to satisfy investor. However, you still pay to have funds.