Importance of Investing in Mutual Funds for Millennials in 2021

Unlike the previous generation, millennials don’t only believe in stockpiling savings through passive investments. They want to be more proactive when it comes to growing their wealth. Part reason being that savings instruments that promise guaranteed earnings offer moderate to low returns at best.

No wonder relatively safe and possibly lucrative financial instruments like mutual funds are becoming so popular with this demographic. However, even with soaring awareness about mutual funds, several millennials are still sitting on the fence, wondering whether to invest or not.

If you’re one such individual, here is why investing in mutual funds is essential this year.

You get experts to manage your wealth

Know that what you choose in the face of mutual funds are stocks that are carefully handpicked by financial experts. They pick funds with the sole aim of providing you as high a return as possible.

With their careful vetting and years of financial experience, you more often than not get to invest in a profitable venture capable of earning excellent returns. Therefore, even if you're a novice investor, mutual funds are a safe and profitable instrument to invest in.

You can invest small and grow big

It's a fallacy that, as a millennial, you need a significant amount of money to build your mutual fund portfolio. In reality, it's the opposite! You can test the waters with only a few thousand rupees. What's more, you can indirectly invest in mutual funds through SIPs.

A SIP stands for a Systematic Investment Plan, where you invest a small amount every month. The SIP then invests pooled funds from several investors into assorted mutual funds. The good news is that SIPs start at just Rs. 500 per month and have the potential to earn considerable returns.

Additional Read: Long Term Mutual Fund Strategy

Allows you to diversify your financial portfolio

We understand if you strongly believe in investing in fixed deposits, PPFs, NPS, etc. These instruments are a great way to secure your future. But, all of them offer you low guaranteed returns. Supplement these investments by diversifying your finances into mutual funds.

Doing this will provide you with a mixed bag of investments. Some with a static earning potential, while others like different mutual funds, with a dynamic earning potential. The latter can reap double the rewards depending on market conditions and the category you invested in.

Ensure you stay liquid

Unlike certain savings instruments, most mutual funds come with nominal or zero lock-in requirements. Therefore, you can redeem your mutual fund units at any time of day and usually at no penalty. This helps you stay liquid as you can quickly encash your mutual funds in case emergency strikes.

Additional Read: Important Tips to Pick Top-Trending Mutual Funds

The final word

As a millennial, you likely require both short-term and long-term investment instruments, and mutual funds offer both. What’s more, this instrument is highly transparent and strictly regulated by SEBI.

So, if you’re looking to start or diversify your financial journey, invest in mutual funds through the Mutual Fund App. Compare and apply for some of the top-rated funds online through Tata Capital’s Moneyfy app. We offer an easy-to-use portal where you can invest in mutual funds, SIPs, insurance, and other such instruments.

Learn more by visiting our website right away!