Gone are the days when the only investment options available on the market were stock and bonds. In the current times, people get a wide variety of investment options such as gold, real estate, insurance, fixed deposits, public provident fund, and most importantly, mutual funds. Of course, everyone wants to invest in the product that could help them get the best ROI. Each investment product comes with its own risk, rewards, and limitations. However, if you are looking for a diversified and professionally handled investment product; you should definitely try mutual funds investment.

A mutual fund can be defined as the investment product in which several investors from a variety of disciplines pool their money into a professionally handled investment. The question is, how mutual funds investment is different from the stock, bonds, real estate, and other investment products? Are there any exclusive benefits the investors get from such investment security type? What amount of capital do individuals need in order to become qualified for mutual funds investment? If you are searching for answers to these questions, you have come to the right place! In this post, we will discuss the major benefits of mutual funds investment. Read on:


Unlike stock traders, you don’t need to be an expert investor in order to become a successful investor in mutual funds. Perhaps, this is why; the mutual fund is often recommended to the beginners who are planning to make an investment but possess little to no knowledge of financial statements, economics, and financial markets.

Smaller Capital Cost

If you have already invested in stocks, you would know the amount of capital an individual need in order to develop their portfolio of stocks. Fortunately, you don’t need to invest a large amount of capital to diversify your stock portfolio. As mutual funds involve the pooling of money, different investors can get the benefit of stock diversification without actually having to invest a significant amount of capital. The good news is investors can purchase units of diversifying equity funds at just 5k investment.

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Economies of Scale

As securities are usually purchased and sold in a large volume in mutual funds, you can expect the transaction cost to be reasonable. In fact, the transaction fee per unit is much lesser than what investors may incur if they purchase and sell the investment products with the help of a stockbroker.

Variety of Products

The best part about mutual funds is they offer a wide range of investment products that help them achieve their investment goals while minimizing their risk. Some of the common products of mutual funds are equity funds, income funds, liquid funds, monthly income plans, balanced plans, and the list goes on.

Different modes of Investment

In order to bring flexibility in investment, mutual funds provide the investors with a wide variety of investment modes and withdrawal options. Unless you want it, you don’t have to make the payment in a lump sum. Some common plans of investment and withdrawal in mutual funds are:

  • Systematic transfer plans
  • Systematic withdrawal plans
  • One time or lump sum payment
  • Systematic investment plans
  • Switches from one plan to another,

And so on. If you want to get the benefits of compounded returns options, it is worth investing in the growth option of mutual funds. On the other hand, the dividend option is the ideal mutual fund investment product for individuals who want regular profits from their investment. It is important to note that no other forms of investment products, apart from mutual funds, can offer such a wide range of investment and withdrawal modes.

Also Read: Major Differences Between Online and Offline Trading

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