7 Reasons Why Mutual Funds Are Your Ticket to India's Capital Market Boom
India’s capital markets are constantly on the rise. Whether you are trading stocks directly or investing through mutual funds, there couldn’t have better been a time for it. Capital markets play a crucial role in facilitating financial transactions.
If you are looking to build wealth in the long term, today’s capital market scenario offers fertile grounds for it. Indian capital markets are in transformative phase driven by advanced user interests, participation of companies. Here are some nuggets from the recent survey by a leading fintech company
- More and more Indian households are shifting from traditional investments like stocks, currency, deposits, to financial products such as stocks and mutual funds. The savings by Indians is expected to grow from $650 million to $1Billion by the end of this decade
- Unlike developed countries where more than 30% of the people invest in equities, only 5% of the Indian households invest in equities leaving a lot of growth potential with the current market growth
- India has recently witnessed a giant surge in IPOs, providing big investment opportunities. In this year alone, in the first six month of 2024, promoter entities of 37 companies sold shares worth $10.5 billion, or Rs 87,400 crore
- India’s stock market capitalization value stood at Rs. 397 Lakh crore indicating that now is the time to make big investment decisions
Investing in India’s growing capital markets through mutual funds offers several advantages that can benefit both novice and experienced investors
1. Diversification
- Mutual funds pool money from multiple investors to invest in diverse entities like stocks, bonds, gold, and other securities, in a way that spreads risk
- A User can also get access to various Asset classes, reducing the impact of poor performance from a single investment
2. Professional management
- Unlike buying stocks directly where the onus is completely on you on how intelligently you trade, invest in mutual funds online is comparatively safe, as the Mutual manager oversees the fund and makes informed investment decisions. Through Mutual fund you can get explore equity, debt, and hybrid (a combination of both) aspects of India’s capital market
- Fund Managers actively monitor your investments and adjust the portfolio (which includes switching) to deliver optimal returns
3. Liquidity
- Mutual fund units give you easy access to funds. It can easily be easily bought and sold, providing investors with liquidity compared to other options like real estate or gold
- Investors can redeem their units any time (subject to certain conditions), thereby ensuring flexible cash flow management
4. Affordability
You do not need to invest a million to explore mutual fund market. You can start even with a monthly contribution of Rs. 500, which will go a long way in building a fortune.
Systematic Investment Plans (SIPs): Investors can contribute small amounts regularly through SIPs, which will promote disciplined savings and returns
5. ELSS
Some Mutual funds offer tax deductions under 80Cof IT act, providing additional saving
6. Regulatory Oversight
Mutual Funds are regulated by SEBI ensuring investor protection and adherence to guidelines. Fund houses provide regular updates and statements to the investors, which can help them know about the fund growth
7. Potential for high returns
India’s capital markets have historically displayed strong growth potential driven by economic development, infrastructure projects, and increased user participation. Mutual funds are the best instrument vehicle to tap into capital market growth, as it utilizes the power of compounding to multiply your returns.
