Diwali is the festival of Wealth and Lights, which is celebrated with great enthusiasm across India. During Diwali, extended families come together to celebrate by wearing new traditional clothes and lighting fireworks.

However, during such times of celebrations, we could lose the track on our expenditure which can hurt our budget. Cutting down on unnecessary expenses can save you a lot of money. For example, it would be better to cut down on fireworks in order to celebrate a green Diwali and reduce your expenditure.

Diwali is considered to be auspicious to start new ventures. So, plan to invest some money multiple investment avenues instead of spending on expensive decorations, firecrackers etc. Investing in mutual funds is a better idea in order to get returns on your investments in line with your financial goals.

Mutual funds are a financial tool that pools in money from different people and invests in stocks, bonds etc. Mutual funds are managed by asset management companies who appoint fund managers to manage various mutual fund schemes in return for a fee.

Here are some significant advantages of investing in mutual funds:

Risk diversification

Mutual funds help investors in diversifying the risk by investing in different portfolios of stock in different sectors, which means not keeping all eggs in one basket. This is one of the biggest advantages of mutual funds that you can build your portfolio according to your risk appetite and expected returns.

Smaller capital

Usually making an investment is seen as something that only prosperous individuals can do as they have surplus money that can be invested. Moreover, many investments require the investor to have a relatively large sum of money to begin with. Mutual funds work on pooling money from different investors, and the investor can buy certain units of diversified funds with a much smaller amount. You can start a SIP as low as Rs. 500 per month.

Handled by experts

Investing in stock markets requires a lot of experience and knowledge of shares. Many investors lack this knowledge and lose a lot of money. On the other hand, Mutual funds are handled by experts who know about picking the right stocks that can give you good returns. Your Relationship Manager, with proper research and market study will take good care of your portfolio.

Cost less

Because mutual funds buy and sell a large number of securities, the transactions cost per unit basis is lower when compared to what retail investors incur when they buy and sell securities from stockbrokers.

Variety of products

Mutual funds offer a range of products that suits the risk profile and investment objectives of various investors. Apart from equity funds which are a little risky, there are also balanced funds, monthly income plans, and liquid funds to suit investors with different investment requirements and risk appetite.

Variety in modes of investment

Investing in mutual funds is also very flexible in terms of modes of investment and withdrawal. Investors can opt for different investment modes like a lump sum, systematic investment plans (SIPs) or switching from one scheme to another.

You can also invest in dividend option if you want regular income from your investment.  You can invest in growth options of mutual funds in return for compounded returns over long-term period.

Brings discipline in investing

Prices of shares are very volatile and can lure investors into buying and selling its shares within a short period in order to earn profits. Such frequent trading could lead to a loss if you are not well versed with the functioning of the markets. Investing in mutual funds for a longer period could lead to wealth generation over time with the power of compounding. Also, investing in mutual funds via SIPs can help you in maintaining an investment discipline.

This Diwali, make it a point to begin your auspicious journey of investments through investing in mutual funds.