Are Mutual Funds Best Way To The Financial Freedom?

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Achieving financial freedom is everybody’s goal, so is mine. So Are mutual funds best way to the financial freedom? As there are many instruments available in the market. Most popular investment options we use are bank fixed deposits, share markets, Government bonds, Gold, Real estate and much more to mention.

Each investment scheme has potential risks associated with them, but Mutual funds are called safest and high returns instrument compared to them all. Before going to why mutual funds are key to attain financial freedom, let’s see what is a mutual fund.

What is Mutual Fund?

A mutual fund is a highly professionally managed investment scheme. It is usually run by an asset management companies(AMC). Here at AMC, fund manager invests our money in share market on behalf of us and in return, we get Net Asset Value (NAV) Units.

To more simplify it further, let’s consider you invested Rs 1000/- in a mutual fund. The fund manager invests your money in different shares. Below asset allocation chart will make it clear.

Mutual funds asset allocation

The best benefit of this is that your investment is diversified across different sectors. Below quote by Scott Cook explains it all.

Mutual funds were created to make investing easy, so consumers wouldn’t have to be burdened with picking individual stocks.
By : Scott Cook

Are Mutual Funds Best Way To the Financial Freedom?

Lets see what are key benefits of mutual funds

  • Minimum amount to invest is as less as Rs 500/- monthly.
  • Money is managed by professionals
  • Power of compounding interest
  • Investments are diversified across different sectors
  • Maximum Returns in long term investment
  •  Inflation beater
  • Transparent & Regulated by Government agency like SEBI.
  • Totally investor oriented
  • Very low fees for service
  • Wealth Creator
  • Great Liquidity
  • Some mutual funds offer Income tax benefit.

you can invest in both lump sum and monthly basis. The term used for monthly investment in mutual fund is called SIP (Systematic Investment Plan). The key benefits of SIP to us is that it we don’t need to time the markets. We just invest specific amount per month and on specific dates mutual fund units are added to account.

This way our money is average out as every month at time of purchase the market condition is different. If market is down we get more units and when markets are up we get less units.

Also Read: Best ELSS Tax Saving Funds To Invest 

Wrap Up

Mutual funds provide safest way to invest money in share market. You can easily beat market Volatility with mutual fund SIP instrument. You just need to be patient and invest for long term and see the power of compounding interest.

If you want to add or suggest something please let me know in comments below

Happy Investing!!!!!

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