Non-Clinical Support » Personal Finance

Mutual Funds

Benefits

Following are the benefits of investing through mutual funds:

Professional money management:
Fund managers are responsible for making investments in any company. They monitor markets, go through the research reports and monitor economic trends like inflation, bank rates etc. and take decision of buying or selling a particular security.

Liquidity:
Investors can sell their mutual fund units on any business day and receive the current market value on their investments (current NAV) within a short period of time (three to seven days).

Diversification:
Diversification is one of the best ways to reduce risk and mutual funds offer investors an opportunity to diversify their risk across all assets depending on their investment needs.

Tax benefits (as of July 2006):

• 100% tax exemption on all mutual fund dividends.
• 100% tax exemption on all long term capital gains on equity mutual funds. Equity mutual funds held for more than 1 year are eligible for 100% tax exemption.
• 10% tax on the short term capital gains

Affordability:
The minimum initial investment for a mutual fund is fairly low for most funds (between Rs 500 & Rs 1000 for some schemes).