Good times or bad times, mutual funds are unbeatable!
Whatever your current situation might be, your goal must be to have enough assets to enable you to sail through the good and the bad in life. So, whether you need to create a fund for your daughter’s higher education, put aside funds for your start-up venture or have a corpus to tide through a dry patch, mutual funds are the most flexible investment instruments that can match up to all your requirements.
The key to getting the most out of your mutual fund is to create a game plan to park aside some money regularly into mutual funds during all times. Investing in mutual funds is easy, flexible and sensible. Let’s check some of the key advantages that mutual funds offer.
The advantage mutual funds have over other vehicles is that you can tailor this plan to your needs. Mutual funds cut across time horizons, too. If your goal is distant, such as to have a comfortable retirement, or if it is a short-term emergency to take care of you in lean times, mutual funds make for ideal vehicles. You can also set up investment amounts just large enough to fit how much your wallet can take.
While a mutual fund manager manages your money on your behalf, fund houses have to abide by strict rules and regulations set up to safeguard your hard-earned money in the best possible manner. Funds have to strictly adhere to rules and invest in only recognised instruments in the financial markets.
When it comes to providing information about where your money has been invested, funds dispense daily details about the value of your investment and the different instruments held by the fund. Hence, there is a high degree of transparency that mutual funds have over all other asset classes.
The ability of a mutual fund to maintain liquidity also remains high. In fact, mutual funds keep some of their funds in overnight and short-term paper that can be encashed to generate liquidity.
One of the most important things to remember about investment is diversification. Mutual funds provide investors a much-needed basket of different instruments not only among various funds, but also within a fund. Diversification is essential these days. A well-diversified portfolio helps to reduce risks from over-exposing to any particular instrument just in case something goes wrong. This also helps to keep the portfolio healthy.
It is also important to consider that when it comes to costs, mutual funds are perhaps the most efficient.
In fact, there are no parallels to mutual funds when it comes to managing your money in the optimum possible way. And, there can never be a good or bad time to start investing in mutual funds. With clear goals, a responsible approach and a disciplined game plan, mutual funds tick all the boxes that make it a wonderful investment.