Investment In Mutual Funds Essay
INVESTING IN MUTUAL FUNDS
In today's world, a large number of investment options are available to you in the form of real estate, commodities, fixed deposits, equities, bonds, etc. However, in India there is a tendency to invest in traditional investment alternatives such as provident funds, bank deposits (57% of savings ) and post office deposits where the principal amount invested is considered to be secure.
One of the lesser known forms of investing is mutual funds. This can be seen from the fact that only 2.33% 1 of all household savings are invested in shares and debentures which includes mutual fund investment as well. The main reason for this is that most people are sceptical about investing in mutual funds because they consider them
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There is 100% exemption on dividend paid by any mutual funds. No long term capital gain is payable on Equity Linked Saving Schemes and Equity funds
In spite of all these advantages, mutual funds suffer from certain disadvantages. Mutual funds are subject to the volatility in stock prices and therefore the returns on investment fluctuate widely and may also result in a loss. Mutual fund investments are also subject to various charges such as management fees, exit and entry load( payments made at the time of entering or exiting a mutual fund) leading to lower returns.
However, the pros of mutual funds far outweigh the cons and therefore it is beneficial for a lay investor who does not have the necessary knowledge or time to invest in the stock markets to invest through the mutual fund route.
A short analysis has been done to show the advantage of investing in mutual funds over bank fixed deposits is given below :-
Thus, in conclusion it can be stated that over a longer period of time investing in mutual funds is more beneficial than the traditional forms of investment. It is time that we looked at mutual funds as one of the major forms of investing in India which has been overlooked by investors over the past
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