Why Mutual Funds are better option when starting Financial Planning as compared to other investment options

16 Nov 2018

Now, it has become important that we make the right investment decisions, as it will heavily affect our future. Most of us indulge in financial planning, with the aim to make our post-retirement life a great one. But, financial planning will not work if we do not select the right investment scheme. 

Mutual funds are quite popular among people of India, and there are some pretty strong reasons behind it too. They are often termed as the best investment decision by most financial experts and lay emphasis on the fact that, a user can get better returns through this instead of facing unnecessary risks. 

One of the major aspects of mutual funds is that they offer its users flexible investment and withdrawal options. Therefore, you can plan your investment as per your needs. But what are the other vital reasons for investing in them?

Mutual funds serve to be a better form of investment 

Among the numerous forms of investment options available to an Indian, the mutual funds serve to be the best one. We have looked at one reason above, now let's go through the other important ones below:-

  1. Smartly managed -  The mutual funds investment plans are handled by a fund manager who has expert knowledge about the market and also manages the investments well. They will act as your guide at every point during the whole investment period and help you out with decisions like the right time to invest, the right scheme to invest in and the correct time to sell out your stocks. 
    Normally, a fund manager is a highly experienced one and they also act as an assurance to your invested money. You will feel your money is safe and that it will in all possibility, rake in a good return on investments. In short, the existence of a fund manager in case of mutual funds, help to make them a secure form of investment.
  2. Easy investment -  Mutual funds serve to be one of the safest as well as easiest ways of earning money through investments. You can also go with the investment process online. It just needs a few clicks to get the entire investment process going. Mutual funds investment plans are easy to operate. You can easily track down the performance of your plan. Those who wish to stay away from lumpsum investments have the option of SIPs available with them.
  3. Secured future - A key aspect of the mutual fund is that you can invest your valuable money in their Systematic Investment Plan. This scheme signifies an investor can keep on investing a paricular sum of money for a certain number of years. An sip investment plan allows for small periodic investments.The presence of such options along with a higher return possibility makes them the top choice for most people, who are looking for an investment scheme that will make their future a better one. This is great in the sense that, it encourages financial planning to a huge extent. You will be more disciplined towards your financial planning approach and know how much to spend and how much to save.  A disciplined financial planning will ensure a better investment process. You will be able to save a good amount of money that will contribute towards offering you a better and secure future

What other reasons support investments in mutual funds?
Other than the above points, there are a handful of other strong reasons too. Let's check them out below.

  1. Diversified investment - In the case of mutual funds, a user's funds are diversified in nature and invested across a wide range of stocks. So, if a stock faces any such change, then it will get the much-needed balance by the performance of other stocks. 
  2. Flexible withdrawal - Where mutual funds starkly differ from other forms of investments is, it is highly flexible in case of withdrawals. So, in case of emergencies, other forms of investments can make it really tough for you to withdraw your money. Mutual funds offer the advantage of liquidity on the invested sum of money. You also have the liberty of withholding your valuable money in mutual fund plans as long as you wish to. However, what most financial advisors will suggest in such a case is, to not withdraw your money until the period of maturity comes and thus, comply with the regulations of the specific investment plan.
  3. Choice of investment - Other forms of investments dictate the already-decided plans to you. So basically, you have no option in this case. But in case of mutual funds, you have more than one choice available. You can decide what kind of fund you want as well as your investment period. You can pick up the plan that suits you the best.

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