The market is continually facing volatility which has led to panic among the investors. Further, constantly fluctuating global economies have had their share of impact on the sentiment of the Sensex, hence making it difficult to take a call on any particular stock . Many investors who had placed their money directly in equities after the phenomenal bull run of last year have suffered heavy losses. Several stocks which were trading at all time highs have tumbled to their yearly lows in a matter of months. In this regard, equity oriented mutual funds, which are currently hovering around at very low NAVs, are the right opportunity for long term investors to invest and get handsome results.
The main advantage that mutual funds offer is that of a diversified portfolio investment which reduces the risk because all stocks do not decline at the same time and in the same proportion. A gullible investor hardly achieves anything in the course of direct stock market trading whereas the same amount of money invested in top- performing MF schemes fetches him handsome returns. For instance, if I invest only in FMCG and due to some government policy, the entire sector crashes temporarily, I would have to wait until it comes up again to recover my investment. However, had I invested the same amount in a top-performing MF (which is not difficult to find out, courtesy all the popular business publications that give you all the data) I might have not only recovered my investment, but also earned a handsome return. Many of you might be believing that mutual funds, although safe, do not give as profitable returns as direct investment into equities. While I do agree with you to some extent, there are also many mutual funds that give a result of 40% on an average, which is not a bad investment by any means. What's more, you are almost assured to get back your investment, since your money is being handled by industry analysts who are often very accurate. This option is particularly beneficial to the service class, who don't have the time to analyze market trends, and yet want to invest in stocks. Hence, investing in a mutual funds is far more beneficial not only in the present turbulent circumstances but also in general, since the scope for getting a handsome results is now at par with investing directly in equity.
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