Save or Invest ?
Many of us dread the thought of managing our own investments. With a professional fund management company, people are put in charge of various functions based on their education, experience, and skills.
As an investor, you can either manage your finances yourself or hire a professional firm. You opt for the latter when:
1. You do not know how to do the job best – many of us hire someone to file our income tax returns, or almost all of us get an architect to do our house.
2. You do not have enough time or inclination. It’s like hiring drivers even though we know how to drive.
3. When you are likely to save money by outsourcing the job instead of doing it yourself. For going on a journey driving your own vehicle is far costlier than taking a train.
4. You can spend your time on other activities of your choice/liking.
Professional fund management is one of the best benefits of Mutual Funds. The infographic on the left highlights all the others. Given these benefits, there is no reason why one should look at any other investment avenue.
Equity funds primarily focus on stocks and seek capital growth. They vary from low-risk large-cap funds to higher-risk small-cap and sector-specific funds, each presenting varying potential return levels.
Hybrid funds blend the growth prospects of stocks with the stability of bonds, seeking to deliver balanced returns. They cater to investors seeking moderate growth while managing their risk exposure effectively.
Emphasizing stability and consistent income, debt funds allocate investments to bonds and fixed-income securities. Generally less risky than equity funds, they provide various choices, including liquid funds for short-term requirements and long-term funds for reliable income.
One should never invest in Mutual Funds but should invest through them. To elaborate, we invest in various investment avenues based on our requirements, e.g., for capital growth - we invest in equity shares, for the safety of capital and regular income - we buy fixed-income products. The concern for most investors is: how to know which instruments are best for them. One may not have enough abilities, time, or interest to conduct the research. To manage investments, one can outsource certain tasks one is unable to do. Anyone can outsource ‘managing one’s investments to a professional firm – the Mutual Fund company. Mutual Funds offer various avenues to fulfill different objectives, which investors can choose from based on one’s unique situations and objectives. Mutual Fund companies manage all administrative activities including paperwork. They also facilitate accounting and reporting the progress of the investment portfolios through a combination of Net Asset Values (NAVs) and account statements. Mutual Fund is a great convenience for those who need to invest their money for future requirements. A team of professionals manages the money, and the investors can enjoy the fruits of this expertise without getting involved in mundane tasks.
SIPs enable investors to contribute a consistent sum to a mutual fund scheme regularly, leveraging rupee cost averaging and gradually accumulating wealth over time without needing to time the market.
For investors possessing substantial capital, lump-sum investments offer a method to fully allocate a sum into a mutual fund, aiming for potential growth or income generation.
Mutual funds can be customized to meet particular financial objectives, like saving for retirement, funding education, or purchasing a home, positioning them as a flexible instrument for long-term financial strategies.
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