What is a mutual fund?

Mutual funds are an investment where a group of investors pool their money to buy stocks, bonds, and other securities. There is a professional fund manager who manages the funds and decides how to invest the money and make profits from it. The investors then get their returns based on the shares they have invested. Over the years, there has been a rapid growth in the popularity of mutual funds among Indian investors.

Benefits of mutual funds

Here are the advantages mutual funds bring to the forefront of modern investing.

• Tax benefits: Mutual funds give tax benefits to the investors. The gains from investments that are held for longer-term are taxed at a lower rate than those that are invested for a short time.
• Affordable: The investors can put a small amount of money in mutual funds. You can start investing with a minimum of Rs. 100.
• Liquidity: Mutual funds are considered liquid investments which means the investors can buy and sell their shares at any time.