Mutual Funds: In today’s time, mutual funds have become a great way of investment, in which monthly investment as well as lump sum investment can be made through SIP (Systematic Investment Plan). The main attraction of mutual funds is that it gives stock market returns, which can help you to create a good fund in the long run. However, mutual fund can also cause losses due to stock market fluctuations, but with the right strategy it can prove to be very beneficial.
Lump sum investment method in mutual funds
There are many ways to invest in mutual fund, one of which is lump sum investment. In this, you invest a large amount at once and then this amount gradually makes interest or return on your investment. If you are thinking of making a lump sum investment, then this method can be very beneficial for you, especially when you want to invest for a long period (15 to 20 years).
How much can an investment of Rs 5 lakh become in 15 years?
Let us now take an example of an investment of Rs 5 lakh and understand how much it can become in 15 years. If you get a return of 12 percent every year, then after 15 years your investment can be around Rs 27.36 lakh.
On the other hand, if you get a return of 15 percent every year, then your investment can be Rs 40.68 lakh. This difference is in the rate of return, and this is why you should keep the rate of return in mind while investing in mutual funds.
Advantages and disadvantages of mutual funds
Mutual funds can prove to be a great way to create a huge fund in the long term, but they also have risks. When the market falls, mutual funds can also incur losses. Therefore, while investing in mutual funds you should ensure that you are investing for the long term and you have the ability to bear the volatility.
Advantages of Mutual Fund:
- Good returns in the long term: Investing in mutual fund can give excellent returns in the long term.
- Minimum investment: You can create a huge fund even with a low investment.
- Tax benefits: Some mutual funds can also get tax benefits, such as tax exemption under 80C on ELSS (Equity Linked Savings Scheme).
- Liquidity: Mutual funds have good liquidity, so you can withdraw money quickly when needed.
Disadvantages of Mutual Funds:
- Risk: Mutual fund have stock market risk, which can harm your investment if the market falls.
- Low returns: If the market is sluggish, the returns of mutual fund may be low.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Before investing in mutual fund, you should consult an expert or financial advisor, taking into account your financial situation and investment objectives. Every investment carries risk, and the value of your investment may rise or fall. Therefore, it is important to have complete information before investing.
Our aim is only to provide you with information about mutual fund, and we are not responsible for any kind of investment result or risk.
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