Why i have to invest in Mutual Funds ? Simple Reason
Today, we are in the stock market world – Yes, obviously. The interaction between the people, companies, and the Government simplifies by using the Technology, it’s also a part of Globalization. There are only 2 – 2.5 percent of Population in India, investing in stock market as retail investors.
There are two depositories in India for depository services, called NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services India Ltd). These are the two keep every ones Demat account and its holding. According to NSDL, the active demat clients were at 1.77 Crore (Demat accounts) and 1.60 Crore investor accounts in CDSL, Total of 3.37 Crore Demat accounts in India
Whether you are going to the direct equity market (Stock market) or not – but there is an opportunity to beat the inflation and fulfill your financial goals by investing in Mutual Funds. I am not saying you would get rich through mutual funds, but one can build their wealth and money needs. The AMFI (Association of Mutual Funds in India) was recently published their report on SIP Investors in mutual funds. As per September 2018, there are 24.4 million (2.44 Crore) SIP Accounts in Indian Mutual Fund Schemes.
During the current financial year, the SIP contribution amount is around 44,400 crore rupees. Every month, around 10 lakhs SIP accounts has been added and the average amount of per SIP account, per month is Rs. 3,165 /-. So, the mutual fund industry is abundance of growing, even the retail investors in the India stock market is very low with the population.
The declining interest rate in the Bank deposits for the past few years and the ease of mutual fund investing, is also the primary reason for the Mutual Fund Industry that grown up. Mutual Fund investment starts the SIP (Systematic Investment Planning) with a minimum investment of Rs. 500 per month. You can also invest or withdraw any amount at any time.
You can change your investment frequency (Interval Period) by weekly, monthly, half yearly or yearly, one time investing. One can pause their SIP frequency at any time and can continue in the upcoming days, if need. This feature is not available in the traditional plans like Recurring Deposit or Term Deposits.
An opportunity to invest in different asset classes like Equity (Stocks), Debt (Bonds, Govt. Securities), Real Estate, Gold, exposure in other countries’ investment products. There is no much need of knowledge about investing in mutual funds, but choosing a right schemes one can consider the Financial Advisor.
Professional Fund Managers or experts are there to manage your mutual fund investments. You don’t need to make any mathematical calculation, statistics. You just sit in your home – Review and Re-balance your portfolio once in a year, if it needs.
Rupee cost averaging (RC average) is the primary factor for investing as SIP. If you are going to invest in a mutual fund at once, if there is a crash in market, there is a very few chance to average it. But, if you are choosing the SIP – you can get more units, when the market crash. It will help you to cost averaging on Rupee Investments.
Tax efficiency is also the advantage for investing in mutual funds. Long term Capital Gains tax exemption are also available with a limit. Investing is debt mutual funds, one can take the indexation benefit on long term capital gains (LTCG). There is no TDS (Tax deducted at source) in mutual funds, whereas Banks had.
Beating inflation is also possible in mutual funds, while in the long run. Even, if you are paying any LTCG tax, it can beat the inflation too and give a better returns than Bank Fixed Deposits. So, now is the time to invest in mutual funds, Markets are in a bear hand and an opportunity to invest in a small by SIP.
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