A mutual fund collects money from different investors and invests it on their behalf. The people handling the mutual funds charge a fee for the management of money. People can choose mutual funds according to their choice and can invest their valuable money in them. Direct investment in these funds is done through the direct plan mutual fund scheme and indirect investment is carried out by regular plans or schemes.

There are many advantages of investing in mutual funds some of them are mentioned below:

Lower tax on gains

With proper schemes and plans, one can gain high returns on their investment. Equity-linked saving schemes can help people to save Rs 1.5 lakh tax per year under section 80C of the Income Tax act.

Lowest lock-in period

People can invest in various tax saving mutual funds where they have the lowest lock in- period of three years. Other options such as ULIPs, PPF and FDs have a lock-in period of five years.

Best tax saving option

Mutual funds are considered as one of the best methods to save tax. ELSS tax saving mutual funds have higher returns than others plans such as PPF, NPS and tax-saving FDs.

Lower cost

One can earn higher returns and can buy funds at low costs as compared to others.

Better safety and transparency

Mutual funds schemes are more safe and transparent due to the introduction of colour coding. Three colours are used to express the levels of risks. They are mentioned below:

  • Brown indicates high risks.
  • Yellow suggests medium risks.
  • Blue shows low risk.

Schemes for every financial goal

One can invest in mutual funds for any financial goal. The investment can start from a minimum amount of Rs. 500 and can go high as per the requirement of the investor. People can invest in these funds according to their choice, income and financial goals.

Mutual funds are easy to buy

They are easy to buy as one can access them from any part of the world. An Asset Management Company offers them through various channels such as:

  • Agents
  • Banks
  • Online investment platforms
  • AMCs can also reach their customers themselves
  • CAMS
  • Brokerage firms


Mutual funds are highly flexible. Investors can choose an amount according to their choice. They can start from low or high amounts according to their incomes or cash flow.

People can also choose the option of SIP [systematic investment plan]. In this plan, a fixed amount of money is invested monthly or quarterly from the salary according to the budget and financial goals of the customer.

Expert management

Mutual funds are managed by experts. They have the required knowledge that can help one to invest the correct amount according to their financial goals and needs. They have adequate knowledge that can also help the investors to gain huge profits according to the scheme.


Diversification helps in reducing the risk involved in building a portfolio. Hence it can decrease the risk for the investor.


Mutual funds are popular among Indians and globally due to their liquidity. They have flexible withdrawal options but one should carefully consider the factors such as exit load and pre-exit penalty.


With innumerable benefits and features of mutual funds, it is undoubtedly one of the best options to invest into.