*The purpose of this article is to simply understand what mutual funds are and then discuss the advantages of investing in mutual funds.*
*Benefits of investing in Mutual Funds*
*Liquidity:* You can easily withdraw your investment amount by simply submitting the signed account statement and the proceeds would be credited directly to your bank account within 4 to 5 working days.
*Professional management:* Mutual funds are managed by qualified professionals. So, Investors do not require analytical approach and expertise to manage their own portfolio.
*Simplicity:* Investing in mutual funds is very simple and you can start with as low as Rs.5,000 lumpsum or even Rs.500 per month via SIP.
*Monitoring:* You can regularly monitor the performance of your mutual funds and that too online with the detailed reports and statements provided by these companies.
*Tax benefits*: Returns of equity mutual funds are tax free if one sells it after holding it for more than a year and in case you sale your fund within a year, then tax would be charged at a special rate of 15 per cent only.
*Variety:* You can invest in a variety of funds like blue-chip stocks, sectoral funds, bonds, money market funds or even balanced funds so as to achieve long-term capital appreciation.
*Inflation adjusted returns:* You can easily beat the ever rising inflation and get better returns than your investments in fixed deposits or other fixed instruments which do not keep pace with the inflation. It has the potential to generate higher returns over a longer period.