Advantages of Mutual Funds Investing

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Investors often get confused in choosing Mutual Funds over stocks or any other investment domain. Mutual Funds Investing has very advantages over other form of investment and has a certain level of risk involved. In this post I would discuss about advantages of investing in mutual funds.

Diversified small investments: Mutual Funds investment is done in various industries which are often from different domains of operations like Auto, Pharma, Oil and Gas etc. This approach helps in reducing loss making risks as if one sector is under pressure then other may be rising, Pharma is sector which is recession proof and evergreen. Also you make small investments and this further reduces the amount of risk you are into.

Lots of choices: Investor can pick a mutual fund which invests in his favourite area of expertise. This can vary from one investor to another according to their profile and risk taking guts.

Well Regulated Mutual Funds: Mutual funds are well regulated and governed by rules and regulations made by SEBI, which are designed to protect the interests of the investor. Distributors or Advisors who advise investors on which mutual finds to invest in are also required to be compulsorily AMFI certified i.e. they are required to pass certain uniform tests that will ensure their knowledge and expertise to advise other people. Mutual Funds are also managed by professionals.

Tax Saving Advantages: dividend from Mutual funds is presently non-taxable

So be smart investor and invest in Mutual Funds.

Mutual Funds Investing - Evergreen tips for MF investing

Mutual Funds Agents are everywhere nowadays wooing the potential investors, but we should analyse the mutual funds and don't go by the words of these agents.

Always check for the NAV and dividend difference because dividends in mutual funds is our own money and if the dividend rises then the NAV amount decreases by the same amount hence providing no net addition to our hard earned money. So always Have a look at difference between growth and dividend option in mutual funds.

I met with some agents who told that premium can be stopped after 3 years or 2.5 years, which is again a wrong representation and a possible trap. We can stop paying in ULIP schemes after 1 year and would not loose 100 percent of our money so keep in mind that the Mutual Funds agents which tell that we can stop paying premium after 3 years or so is a wrong point as ULIP premiums can be stopped even before 3 years, there is just lock in period of 3 years.

Check out the percentage returns of the mutual funds in last few year's and purchase only if the return is substantially more then the returns from the Stock markets. One should always remember that A simple thumb rule is that anything beyond bank FD returns will always carry some level of risk, other wise why will someone buy FD at all if they can get some guaranteed returns.

Always ask for IRR of the policy before getting one for you, Also dont fall to the agents who say that money will double in just 2 years or three years that is totally ridiculous and false. Mutual funds gives from 10 to 17 percent generally.

So concluding the post by saying that analyse the policy properly, you can google about the basics of ULIPs anytime and yell out at agent which tries to fool you in future HAPPY INVESTING!!!