Millionaires’ Secrets Revealed: How Mutual Funds Catapulted Their Wealth

Mutual funds have been a popular investment vehicle for decades, and their appeal only continues to grow. According to the Association of Mutual Funds in India (AMFI), assets under management (AUM) rose to an all-time high of Rs 35.37 lakh crore at the end of May 2021, up from Rs 24.54 lakh crore a year ago.

 

Millionaires have recognized the power of mutual funds in building wealth, and they have leveraged the expertise of asset management companies like Bajaj Finserv Mutual Fund to grow their fortunes. With over 16 years of experience in the Indian financial markets, Bajaj Finserv Mutual Fund has been a popular choice among investors looking to generate long-term wealth through mutual funds.

 

So, how exactly do mutual funds help millionaires catapult their wealth?

Diversification of portfolio

One of the key advantages of mutual funds is that they offer investors a diversified portfolio of investments. This means that instead of investing all their money in one stock or asset class, investors can access a range of assets (such as stocks, bonds, or gold) with just one investment.

 

This diversification helps to reduce risk, as it spreads the investment across a range of holdings. For example, if one stock or asset class underperforms, it may be offset by other holdings that perform well. By diversifying their portfolio, investors can mitigate the risk of being overly exposed to any one investment, and create a more stable, long-term investment strategy.

Professional management

Another advantage of mutual funds is the professional management provided by the fund manager. The fund manager is responsible for selecting the investments that make up the portfolio and constantly monitoring and adjusting the portfolio to ensure it remains aligned with the fund’s investment objective.

 

This professional management means that investors can benefit from the expertise of a seasoned investment manager and take advantage of their experience in the Indian financial markets. It also means that investors do not need to monitor the markets and their investments on a day-to-day basis, as this responsibility lies with the fund manager.

Higher returns

One of the main goals of investing is to generate a return on the money invested. Mutual funds have historically offered higher returns than other types of investments, such as fixed deposits or savings accounts. According to AMFI, the average return for equity mutual funds over the last 10 years has been 11.28%, compared to 6.67% for bank fixed deposits.

 

Of course, there are no guarantees that a mutual fund will perform well, as all investments are subject to market volatility and other risks. However, by investing in a professionally managed, diversified portfolio of assets, the chances of achieving higher returns over the long term are increased.

Tax benefits

In addition to the above advantages, mutual funds offer a range of tax benefits to investors. For example, equity mutual funds held for more than one year are subject to long-term capital gains tax of just 10%, compared to 20% for other forms of investment such as property or gold.

 

This can be a significant advantage for investors looking to grow their wealth over the long term, as it helps to reduce the amount of tax paid on investment gains.

Conclusion

In conclusion, AMC like Bajaj Finserv Mutual Fund have proven to be an effective tool for generating wealth for millionaires. By diversifying their portfolio, taking advantage of professional management, and investing in assets that offer higher returns, investors can create a stable, long-term investment strategy.

 

However, it’s important to note that investing in the Indian financial markets comes with risks and challenges, and investors must evaluate their own financial goals and risk tolerance before investing in mutual funds. As with any investment, it’s important to conduct due diligence and seek the advice of a professional financial advisor before making any investment decisions. 

 

Disclaimer: Investment in securities markets is subject to market risks. Please read all the related documents carefully before investing. Past performance is not an indicator of future returns. The article is intended only for informational and educational purposes. It is not a solicitation, recommendation or offer to invest in a mutual fund scheme. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

About Author