What are the benefits from Mutual Funds?
Posted on: 24/Jul/2017 3:05:22 PM
Mutual Funds are the sources to solve multiple money requirements – such as any emergency expenditure, post-retirement income, etc.
Though there many avenues for investment like the stock market, mutual funds play a prominent role among the investment avenues. The investor can choose the optimum mutual fund plan according to their financial conditions and invest and earn good benefits.
Mutual Funds help earn the benefits from the stock market without directly indulging in the same, There are many types of mutual funds. These include equity funds, debt funds, liquid fund, and balanced funds.
According to the experts in the field, the investor, after considering his/her financial status, can select the optimum type of mutual fund and earn the benefits. In fact, the selection of the optimum mutual fund investment can answer as the source of multiple requirements mentioned at the start.
Systematic Investment Plan, known as SIP, is an excellent avenue as a regular investment opening. They can yield excellent benefits in the long-term. They provide an excellent avenue when encountering needs for any emergency expenditure. It is really worthwhile to create an avenue as an emergency fund. For this, liquid mutual funds are ideal. By investing a fixed amount every month, an individual can create a handy emergency fund in a few years. This will definitely serve handily during the emergencies.
The Liquid fund scheme is better than a savings account in the bank in certain aspects. Money can be withdrawn whenever required. Investments like this are highly recommended as and when the individual needs the advance while buying a new house/flat, One can calculate the advance required for buying the house/flat after taking into account the amount applied as housing loan and the select a suitable fund to make monthly investments. This would come in handy as an advance while buying a house/flat.
Most individuals resort to utilise the Provident Fund Savings for this purpose. However, the experts in this field advise totally against this.
Bonus payments – Most of us tend to spend the bonus money received on unnecessary things/avenues – on the other hand, it is far better to invest this annual bonus in investment such as liquid fund. Actually, rather than investing this amount PF, it is better to invest in Debt Fund. This can also help reduce the Income Tax. It is worth noting that while investing PF, it would attract Income Tax according to the IT limits of the individual.
Mutual Funds can also be utilised when the individual has set some personal targets on the finance aspect. These may include higher education of children, or even planning a visit abroad. How to save for these target expenses? One has to select the optimum SIP (Systematic Investment Plan) and invest a fixed amount every month, As it matures, it will serve handily to meet the above expense targets.
Even those whore pensioners can invest in SWP – Systematic Withdrawal Plans. SWP is exactly the reverse of SIP. In this, one can invest a large amount and withdraw the specific monthly amount. Though equity funds are also available, it is safer to approach debt-based funds.
