Mutual fund - Top 10 Reasons to Invest in MF

A mutual fund (MF) is a collection of stocks and bonds and other securities. An investor can purchase units of Mutual fund instead of directly investing in stock market and get proportional return in the form of dividend. Reason why people invest in units of MF is because a MF company has a team of experts who keep a close eye on the scenario of the financial market. So, they can use money more efficiently and effectively. Top 10 reasons to invest in Mutual funds are:

     1.     Dividend received from units of MF is exempt u/s 10(35) of Income tax Act, 1961.

     2.   You need not to worry because there are experts who are trading on your behalf. You need no professional skills.

     3.   MF units are diversified. So failing of one or more securities may not have any huge impact on the earnings.

     4.   You don’t have to buy securities in bundles. Indirectly you are investing in a number of companies without any limit.

     5.    You need not to have a huge amount of money to trade. Like in Rs. 10,000 you can get a good deal.

     6.   High liquidity. If you need money urgently, you can get it within 1 day of sale.

     7.    You need not to pay heavy brokerage like while dealing directly in securities through broker. MF companies charge a nominal fee as they have their own contract with brokers.

     8.  More  efficient than to invest in ETFs or closed-end fund.

     9.    You can get a deduction u/s 80C of IT tax, 1961 up to Rs. 100,000.

10.  You can diversify your portfolio later including more types of mutual fund into the same.