What are the benefits/advantages of investment in mutual funds?

Benefits/Advantages of Investment in Mutual Funds:
(1) Benefits of diversified and profitable investment : Mutual fund collects small
savings of millions of people and pool such savings for profitable investment. The
funds collected are invested in sound and profitable companies from different
industries. As a result, the benefits of diversified and profitable investment are
available to small investors. Investment in mutual funds is treated as liquid,
reasonably safe and profitable investment.
(2) Benefits of professional management : Mutual funds are managed by trustees
who are professional experts in the field of finance, business and management. They
frame the investment policy for the mutual fund. Naturally carefully planned and
sound investment decisions are taken. The investment made is safe as well as
profitable. The benefit of such professional management is passed on to every
investor with the mutual fund.
(3) Liquidity to the investment : Mutual funds provide liquidity to the investments due
to open-ended investment schemes. The investor can sell his shares or units in the
market and recover his investment. Even repurchase facility is provided by mutual
funds (e.g. UTI). This gives the benefit of liquidity to investors.
(4) Tax benefits : Tax benefits are given by the government to the investors of mutual
funds. This tax benefit relates to payment of income tax on the income earned
through such investment. The tax relief under 80L is one additional benefit available
to investors of mutual funds. In addition, investors can take tax benefit on the amount
invested in the scheme.
(5) Assured allotment : All applications made to mutual funds for purchase of units are
normally honoured. This gives the benefit of assured allotment to the investors.
Assured allotment avoids tension on the part of investors. Loss of interest on
application money is also avoided.
(6) Effective regulation : Mutual funds in India have to operate as per the guidelines
issued by SEBI and also by the government or RBI from time to time. There is
supervision and control on the functioning of the mutual funds. This is necessary for
the protection of investors.
(7) Spread of risk : Mutual funds invest their funds in securities from different industries.
As a result, the risk in the portfolio management is spread over a wider area. Some
companies may incur losses but such loss will be compensated by more profits by
other companies in which funds are invested.
(8) No Tension : An investor gives his savings/surplus money to the mutual fund and
the fund looks after the investment of money collected from such investors. The
whole botheration of profitable and diversified investment is given to the fund. In
short, the investor gets benefits without botheration and tension.