Mutual Funds – Basic Understandings

When it comes to investment of Money than we explore many different options available in the market to invest our hard earned money. As we all know we require money for our future needs & the way inflations is increasing day by day more and more money will be required to achieve our future goals. 



That goals may be higher education of our children's, children’s wedding, money required after retirement etc. If we have large amount of money than we think to buy a property. But then again the downfall in housing industry came since the arrival of Prime Minister Mr. Narendra Modi in 2014. Than we again start asking our office colleagues or our neighbors or our friends for various options to invest our money. 

Mainly the following investment options we hear as recommendations from various people around us but that also have some specific limitations:

Investment Instruments
Limitations
House Property
Flat or Plot very far from city that cost less
Life Insurance
Major Portion of your premium goes to agent
PPF
Lock in period of 15 years
Post Office Savings
Lock in period varies from 5 to 10 years
Fixed Deposits
Lock in period varies from 5 to 10 years
Recurring Deposits
Lock in period varies from 3 to 5 years
Share Market
Full of risks
Buying Physical Gold
Fear of getting stolen


Different people give different advice as per their past experience. Now that particular investment of money will fit into our future goals or not that we can't imagine. But if you ask me the same question than my answer will be only mutual funds through SIP (Systematic Investment Plan).

From last 8 years I am personally investing into mutual funds through SIP route. With monthly investment in SIP, I personally managed to achieve many of my big events at home.

In past 20 years mutual funds has given phenomenal returns in terms of investment. Also a very big advantage in Mutual Funds is that the entire money can be withdrawn anytime so it provides full liquidity.

Key Factors which force you to invest in Mutual Funds via SIP route:
·         Highly Qualified Funds Mangers which manages your funds
·         Provides Full Liquidity & Flexibility
·         Gives Highest returns in long terms
·         Can Opt out anytime (except tax saving funds that has lock in period of 3 years)
·         Monthly investment provides better averaging

In our next blog I will guide you how to choose best mutual fund for your investments.

Blog By
Rahul Sapra
Financial Expert

Location: Delhi, India

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