Basically, a mutual fund is an investment fund in which people pool their money to a fund manager, so he can multiply the initial investment using his extensive knowledge and industry expertise in securities, stocks, equity etc.

There are multiple disadvantages of choosing mutual funds as a mode of investment, but their advantages outweigh their disadvantages.

Diversification

“Don’t gather in one canopy in a battle as the enemy can easily defeat you, so spread”. As the golden rule of investing is to diversify, which means not investing all your capital in one stock, to spread risk. So, how can a single person monitor different types of stocks, equities and securities at the same time with an on-going job? It sounds impossible. So, don’t hesitate to give your capital to mutual funds as they invest for you by charging minimal fees and provide the best risk managed portfolio for your investments.

Professional Management

When you have a heart attack, you go to the heart specialist. When your car breaks down, you go to mechanic. Such is the case with investments. There is no need to exhaust your time, just trust the person who has expertise in investing, just like you have in your own field. The mutual fund manager has extensive knowledge and ample amount of experience which makes him eligible for your investments.

Affordability

Transparency

A mutual fund is like a metro in a city where you can ride with the lowest money, which gives you a chance for investing according to your budget. You can start investing with a minimal amount without any fear of losing it. 

As mutual funds show each and every detail on a monthly basis in their monthly Fund Manager Reports (FMRs) regarding the fund’s net assets, returns of the fund along with comparison with industry returns which help you to compare and make a decision.