The ultimate guide to why and how women should invest in mutual funds3 min read . Updated: 22 Dec 2020, 11:08 AM IST
Mutual funds serve as the best investment vehicle for women. They offer simplicity, accessibility, diversification, variety, affordability, as well as flexibility. Find out more here!
When it comes to saving for the long term, it’s not the easiest thing to do for most people. Some struggle, some quit mid-way, and others do not take it as seriously. The case might look different for women, because they’ve been attributed with the virtue of patience, which proves to be a huge blessing in this scenario. No wonder, mutual funds serve as a suitable investment vehicle for them, as they offer simplicity, accessibility, diversification, variety, affordability, as well as flexibility.
At a very fundamental level, money is a symbol of independence. Earlier, they would depend on their parents but today, women are empowered enough to make their own decisions.
So, let’s understand why mutual funds prove to be so beneficial for women:
● Liquidity: One of the biggest advantages that mutual funds bestow investors with is liquidity. The units can be redeemed at any point in time. Unlike fixed deposits, mutual funds have flexible withdrawal, but yes, the exit load must be taken into consideration.
● Long-term wealth creation: One can invest in mutual funds via a Systematic Investment Plan (SIP), which may help build wealth in the long term. It provides investors with a simple way to keep their investment plans on track.
● Tackles volatility: The value of an investment may not rise or fall in unison. What may happen is that when the value of one investment goes up, the other may see a decline. In such a scenario, the portfolio’s performance has a lesser chance of being volatile. The good part about diversification is that it may reduce the risk involved in building a portfolio.
● Inflation-beating returns: In a usual case, if you keep your money as it is, its value could depreciate year on year. But not when you invest in mutual funds, because it fights the effects of inflation in the long run.
● Helps you start small: When you invest via an SIP, you do not have to bear the burden of investing large amounts of money. You can go for something as little as ₹500.
● Good tax-saving option: Mutual fund is certainly an effective tax-saving option today. With ELSS, you can get an exemption of ₹1.5 lakh a year under section 80C of the Income Tax Act. Moreover, you may get higher returns compared to other tax-saving instruments like PPF, NPS, and FDs.
● Digital accessibility: With digitalisation in the forefront, it’s a good sign that mutual funds offer easy and seamless modes of online payment such as NetBanking, UPI and other platforms that can put your investments on autopilot, making your SIP investments faster, safer, and convenient.
● Expert management: A new investor might not have enough knowledge on how and where to invest, which is why experts step in to manage and operate mutual funds. The experts pool in money from various investors and allocate this money in different stocks and bonds, thereby helping investors reap profits.
Taking the #firsteasystep towards Index Funds
Now that you know all the benefits of mutual funds, it’s time to take a leap towards a financially secure future. If convenience, low costs, and a long-term goal are on your mind, it’s time to give Index Funds a shot. In a nutshell, these are passive funds that track the performance of a specific index—NIFTY NIFTY 50 or NIFTY NEXT 50. Instead of going for individual stocks, you get the flexibility of having a share of every company in the list. Now, that sounds like a good idea, doesn’t it?
The last word
The attributes of mutual funds are quite similar to those of women, and it is exactly why this investment vehicle is a perfect fit for them. So, what are you waiting for? Start investing right away!