If you also have these conditions in the matter of investment, then never invest in Mutual Funds

If you have not invested in it till now and want to do it now, then you should also understand some other things related to mutual funds very well. Here know about 3 types of people who should avoid investing in mutual funds.

Mutual Funds have become a very popular scheme in today's time. The reason for this is the many features of mutual funds. The first advantage is that even people with small income can invest in this scheme because investment can be started in it with just Rs 500 and investment in SIP can be increased as the income increases. You can invest any amount in it and run any number of SIPs simultaneously. There is no maturity date in SIP, you can close it whenever you want and use the money. This scheme is considered very good in terms of wealth creation. Its average return is considered to be 12 percent which is better than any scheme in today's time. Due to the benefit of compounding, a good fund can be created from this scheme in the long term.

These are the benefits of SIP Mutual Funds. But if you have not invested in it till now and want to invest now, then you should also understand some other things related to mutual funds well. Also, before investing, you should prepare yourself to take some risk because being a market linked scheme, there is no guarantee of return in it. Here know about 3 types of people who should avoid investing in mutual funds.

If you are not ready to pay extra charge

For managing the mutual fund, a charge is levied from your investment in the form of Expense Ratio. In fact, AMC i.e. Asset Management Company, bears the cost of fund distribution and marketing, along with this AMC also bears the cost of transfer custodian, legal and auditing of the mutual fund. All such expenses are recovered from the investors who buy the units of the mutual fund.

These expense ratios are not recovered at once. Fund houses calculate their daily expenses, after which it is calculated on a daily basis. Annual expense ratios are divided into the trading days of the year. Which are applied on the total NV. Expense ratio shows how much fee your mutual fund management is charging from your investment portfolio. Sometimes this charge is less in the beginning, but later it becomes more. If you do not want to pay any charge in investment, then you should not invest in mutual funds.

Do not want to invest for a long time

It is not that you cannot invest in mutual funds for short term, but if you want to create a big fund through MF, then you should invest for long term. Most of the experts of economic matters believe that when you invest in mutual funds for a long time, then you get a good benefit of compounding and you can easily create wealth. In such a situation, if you cannot invest for a long time, then you can also go for some other option instead of mutual funds.

Do not want to pay tax

When you invest in any other fund, you get exemption in income tax. But this is not the case with mutual funds. Tax is also levied on the returns of mutual funds, due to which your profit decreases by a few percent. If you are not ready for this, then do not invest in mutual funds. However, its ELSS scheme includes tax benefits.

(Disclaimer: Investments in mutual funds are subject to market risks. Do your own due diligence or consult your advisor before investing.)