Mutual funds: best investment platforms for beginners

Mutual funds serve as a great investment platform for the beginners that help achieve financial objectives and undermine risk tolerance within a fixed period of time. To avail such facilities, an individual must select the right financial products that match their investment objectives. The steady inflow of cash through SIP investment develops trust and confidence in mutual fund investors. It is advisable to reach out to the best wealth management services in India for guidance.

But, how does a mutual fund sets the foundation for goal-based financial planning? Well, the significance of financial planning is to pave the way for one’s financial prosperity. Using mutual fund options like equity funds, debt funds, etc, one can start with the process of financial planning.

5 reasons why mutual funds is one of the best investment platforms for beginners

Given below are top 5 reasons that make mutual funds an important investment platform.

· Helps in maintaining discipline: One must always start investing after setting up a perfect goal. Without this, the journey of the investors can stop any moment. Understanding the significance of financial planning and having a fixed goal ensures investors stay on track and measure the progress, happening monthly or quarterly. Such personal financial planning tool helps investors to deal with their investments in a positive way and improve budgeting. It will also help in doing global investing from India.

· Promotes early investments: The amount of investing in goal-based financial planning is not more important that the time when the investor starts his/her investment. Technically, it is believed that an individual can start successfully only if he/she starts it early. According to records, it did work for people like Warren Buffet who started investing at the age of eleven. Although he still mourns the fact of not starting it earlier.

· Helps in identifying the risk profile: As one of the best investment platforms for beginners, Mutual Funds help to make long-term decisions regarding investing, considering the risk factor involved. People who are not disciplined with their investments tend to buy securities at high prices and sell them when the prices are low which adversely affects their financial condition. But, by investing in mutual funds, one is free from making such random decisions. Also, the funds are diversified in mutual funds that reduce the risk factor as well. Doing risk assessment is necessary, especially when you are doing global investing from India.

· Tracks the progress: Simply using a personal financial planning tool to get benefitted from investments is not enough. A person must always track the progress he/she is making during this investment cycle. By planning about the investment strategy makes one realise how far he/she has come and set up strategies for the upcoming future. Some investors fail to see the benefit they receive from compounding unless its effect starts to fall on their profile; most of them do not understand the significance of financial planning.

· Diversifies one’s portfolio: Mutual funds are one of the best investment platforms for beginners since it promotes diversification. Beginners who are new in the field of investing must take up mutual funds since it has the lowest risk profile, however, it is best to make such decision after consulting with wealth managers who offer wealth management services in India. It diversifies the risk factor by allocating the money into different funds. Thus, even if the market falls for one class, there will still be other classes to fill up the gap. About 90% of the results are developed from asset allocation. Also, the portion that is distributed among classes is shuffled from time to time due to a change in the risk profile, the investment time horizon, etc.

Sticking to long-term investments in very important for reducing risk factors. It is only through goal-based financial planning, that individuals can keep their emotions in check and also chalk out the amount they want to invest.