This year, Santa Clause has done his homework well. He has decided to include adults in the list of gift recipients along with children. Having taken note of the fact that things like economic slowdown, inflation, price-rise and job cuts take up our time and energy during most of the year, he has vowed to drive away worry, despair and stress from the lives of people.

The mundane lives of people can be brightened if people can live well in the present and also plan a reasonable future, mainly with mutual fund products. Here are the advantages:

Mutual Funds as a bridge to several asset classes

Mutual fund schemes act as a bridge to reach a definite asset class – equity, debt, bonds, fixed income instruments and gold. In a large number of countries around the world, it is also possible to invest in real estate, commodities and several other asset classes through the MF route.

A vehicle to invest in specific investment products

Investors who are interested in debt funds can choose to take exposure to government securities, treasury bills, call money, etc, through the mutual fund route. This might not have been possible for a small investor otherwise.

Greater liquidity and flexibility

Among several asset classes, mutual funds offer far better liquidity. The partial redemption option offered by mutual funds helps in selling part of the investment required to fund current needs without having to sell the entire holding, which might have been the case in some other investments. Further, with the abolition of the entry load and no exit loads for long-term investments, this is perhaps the cheapest means to invest across many asset classes.

Additional benefits of investing in Mutual Funds

They help in protecting investments against inflation, offer exposure to multiple asset classes and products, which in turn reasonably insulate the investor from the vagaries of the market. Also, for people investing in equity funds, the returns are usually higher than the combined effect of inflation and taxes which might have to be borne. Moreover, an investment made on a long-term basis (over a year) is eligible for exemption from capital gains tax.

Mutual Funds Fs need minimum funds to start

Mutual fund schemes offer a convenient route for small and retail investors who do not have the financial muscle to make a big investment and yet would like to approach the world of investment in a balanced manner. Small investments in the form of SIPs can help build a sound corpus and thereby ensure good returns over time.