Mutual Funds Are Easy To Track

Many investors believe equity is one of the best asset class to create wealth for the long term. Instead of buying stocks, which are difficult for them to track, they are investing in this asset class using mutual funds. 

1. How do mutual funds score over direct investments in stocks? 

It is becoming increasingly difficult for individuals to track companies on their own as they do not have time and resources at their disposal for the same. Mutual funds are managed by professional fund managers, who track, evaluate and research companies on a regular basis. Sectors and companies on a regular basis. A fund manager’s decision to invest in a particular share is backed by strong research by the team. Many individuals fall prey to stock tips, or market sentiments and go overboard on individual stocks without understanding risk. A fund manager evaluates risk before buying a stock and there are guidelines in place. Guidelines are in place on how much a fund manager can invest in each stock and each sector, which helps in the long term. 

2. How much money would one need to start investing in mutual funds? 

Mutual funds allow you to start investments with very small amounts. You can start with as little as Rs 500, and indirectly hold a portfolio of stocks. You can choose to contribute one time lump sum or have the flexibility to do SIPs on a monthly basis. As compared to stocks, you do not need a demat account to hold mutual fund units. Many blue-chip stocks themselves quote at a high price, and to even buy a single stock you would have to invest more than what you do in mutual funds.