Advantages of Mutual Funds: Why They're a Smart Investment Choice

This article delves into the numerous advantages of mutual funds, from diversification to professional management. Explore how mutual funds can benefit your investment strategy.
EXPLORE FUNDS
4 mins
30 October 2023

What Are Mutual Funds?

A mutual fund is a type of investment vehicle that pools money from multiple investors to purchase securities such as stocks, bonds, and other assets. The funds are managed by a professional asset manager who invest the money in different securities to help the investors earn a profit.

Some Advantages of Mutual Funds

  1. Professional Management: Mutual funds are managed by professional asset managers who have years of experience in the financial markets. They have the expertise to make informed investment decisions and help investors earn a profit.
  2. Diversification: Mutual funds invest in a variety of securities, which helps reduce or mitigate the risk. This diversification helps protect the investor's portfolio from market volatility.
  3. Liquidity: Mutual funds are highly liquid investments, which means that investors can easily buy and sell their units at any time.
  4. Tax Benefits: Mutual funds offer tax benefits to investors. For example, in general long-term capital gains from mutual funds are taxed at a lower rate than short-term capital gains. Also, by investing in ELSS mutual funds investors can save tax on income of up to Rs. 1.5 lakh (under 80C), but these funds have a lock-in period of 3 years.
  5. Affordable: Mutual funds are affordable investments that allow investors to start with small amounts of money. You can start investing in 1000+ mutual funds with as low as Rs. 100 on the Bajaj Finserv platform.
  6. Safe and Transparent: Mutual funds are regulated by the Securities and Exchange Board of India (SEBI), which ensures that they operate in a safe and transparent manner.

Top performing funds

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Debt

Hybrid

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Frequently asked questions

Why invest in mutual funds?

Investing in mutual funds offers several benefits such as professional management, diversification, liquidity, low cost, tax benefits, affordability, safety, and transparency.

Can you lose money in mutual funds?

Yes, mutual funds are subject to market risks and hence there could be a possible loss of principal.

What are the factors you need to consider while choosing the best mutual fund scheme?

The factors that you need to consider while choosing the best mutual fund scheme include active vs passive management, role in your portfolio, performance, expense ratios, taxes, and manager's tenure.

What is good approach for you to enjoy highest returns from mutual funds?

A good approach for enjoying high returns from mutual funds is by investing for the long term and choosing a diversified portfolio.

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Disclaimer

Bajaj Finance Limited (“BFL”) is a Non-Banking Financial Company carrying the business of acceptance of deposits, providing lending solutions to Retail & Corporate customers, and is a Corporate agent of various insurance Companies. BFL is also registered with the Association of Mutual Funds in India (“AMFI”) as a distributor of third party Mutual Funds (shortly referred as ‘Mutual Funds’).

BFL does NOT:

(i) provide investment advisory services in any manner or form;

(ii) perform risk profiling of the investor;

(iii) carry customized/personalized suitability assessment;

(iv) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.


In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on ‘As-is’ basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme /Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities. The NAV will inter-alia be exposed to Price / Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other / better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Bajaj Finserv Direct Limited, (“BFDL”), a wholly owned subsidiary of Bajaj Finserv Limited (is a Registered with SEBI as an Investment Advisor with Registration no. INA000016083). BFDL enables resident Indian customers to directly invest in third party mutual funds through its online platform. BFDL entered into a referral arrangement with BFL, whereunder, BFL may, without risk or responsibility on its part, refer the resident Indian customers who are interested in placing their investments in Direct Mutual Funds through BFDL online platform. Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc. and shall also consult their financial advisers, if they are unsure about the suitability of the scheme before investing