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What is Mutual Fund Investment: Advantages and Disadvantages


Investment has become a prime factor to make wealth. In this modern-day world, smart people make more money than hard-working ones.

It’s true because working 9 to 5 hardly you can afford to lead a life. But you can’t make money in the long term. Investing is the best choice now because there is a lot of competition all around.

So, it is the best time to invest to make a good return. Then one can come across various questions like

  1. Where to invest to make a good return?
  2. Is it better to invest in the Share Market?
  3. Whether share market is risky?
  4. What are Mutual Funds?
  5. How to invest in Mutal Fund?
  6. What are the benefits of Mutual fund investment?

Likewise, these questions about investment will be going through your mind.

So, in this blog, we are going to answer some of the essential ways to invest. Especially, about ease of investment with less risk.

Where to invest to make a good return? Mutual fund investment or share market

Now, many businesses are getting a lot of opportunities for foreign investments. As there are a lot of hopes in the Indian company. In 2021 alone, 21 billion foreign investments have been made for Indian Startups.

So, there is a huge opportunity for cash flow for Indian businesses. With some intelligence, start investing. There are primarily three ways of investment.

  1. Fixed deposits
  2. Share market investment
  3. Mutual Fund Investment

As everyone is aware banks won’t give more interest on the sum deposited. Consequently, one can not even get a good return.

Now, India’s inflation rate is about 10%. But still, banks are giving only up to 7% interest on fixed deposits. Therefore, if one is making fixed deposits, then his/her money is depreciating -2% every year.

So, what is the benefit of investing in banks a fixed deposit?

Then another way is Stock Market investment. As everyone is an aware investment in shares has become more vital and necessary. Now, one can see ads on share market investment platforms like Groww, Upstox, and many more.

In this world, one can become wealthy by investing. Those days were gone, where people dreams about becoming rich from securing a job.

Now, one can easily buy shares of the company within a few clicks. As there are a lot of stock market platforms that help through the process.

One can start trading by opening a Demat and trading account. Initially, one has to have some basic knowledge before investing. Sometimes, even good investors choose the wrong stocks and lose money. 

So, one should have a lot of in-depth knowledge of stock market investment.

Is it better to invest in the Share Market?

According to the recent trend, many early-stage investors have lost money in the share market. The two main reasons are 

  1. Lack of knowledge about share market
  2. Investing according to the trend 

Nevertheless, there is a chance of making a high return in the share market as well. But one should have in-depth knowledge about the market. Even one should be aware of the present scenario of the businesses.

Mutual Fund Investment


In this type of investment, there will be no high-risk factor. Many of us don’t know 

  1. What is a Mutual fund?
  2. How mutual funds work?

Mutual Fund is a financial institution or organization where it will collect lump sum money from different investors. Then convert them to a huge investment opportunity.

Here, high professional fund managers handle the money. So, your investment is in safe hands. Unlike, in the stock market where the entire money will be in the investor’s fate.

In mutual fund investment, fund managers are solely responsible for buying or selling fund units. Here, fund managers are highly skillful in investment.

So, your investments have been made in various securities like equity, gold bond, government bond, debt funds, Real estate, and many more. Ultimately, your investment has a lot of diversification.

People who don’t have enough time to know about the share market. Even those who don’t have any patience to be aware of the market trend. Then those types of people can make Mutual fund investments.

From Mutual fund investment, one gets to know about the glimpse of money diversification. Now, one easily invest in a mutual fund online.

Also Read: How Share Market works

How to invest in Mutal Fund investment?

Now, it is way too easy for mutual fund investment. One easily makes an investment in Mutual funds online.

There are a lot of organizations leveraging on mutual funds investments.

  1. HDFC mutual funds
  2. ICIC mutual fund scheme
  3. Mutual Fund Sahi Hai

So, there is a lot of organization to invest in a mutual fund.

Let’s talk about some of the advantages and disadvantages of mutual funds.

Advantages of Mutual fund investment

Investing in Mutual funds is the best way to start your investment journey. 

Low-risk investment

In mutual funds, all your investments will be monitored by the professional fund manager. As a result, the chances of losing your money are less.

Unlike in the share market, choosing the wrong shares might drown all your investment.

As fund managers are highly skillful and know where and how to invest. Even they have a wide range of experience in this field.

So, they even have a lot of concern and responsibility for their investors. Ultimately, Mutual fund investments have a fewer risk factors.

Fast transaction

Here in mutual funds, one can easily sell or buy funds units. Fund managers will give some advice about the fund’s units as well. 

So, there are more high chances to sell the mutual fund units and get the return.

Unlike in the share market, one has to be aware of the liquidity of the shares before buying or selling.

Portfolio Diversification

Here, the portfolio is the record of all your investments. So, there are all the track records of the investments.

In Mutual funds, all your investment has been made in various securities such as real estate, government bonds, FDs, and many more. 

So, portfolio diversification will be high and positive.


Mutual funds give the way to make an investment in SIP ( Systematic Investment Plan).

Here, a fixed deposit is debited from the bank every month on a specific date to a certain mutual fund scheme. From this practice, one will have a discipline investment mindset.

Disadvantages of Mutual fund

Even Mutual fund investors have some flaws in a certain perspective


There will be more expenses while making an investment in mutual funds. Initially, one has to give some amount while starting a mutual fund journey.

Then there will be a specific amount charged by the fund managers as well. Even where the fund units are sold or bought some amounts are gone into the hands of the organization in the form of commission.

Sometimes, this expense ratio might reach up to 3%.

Average return

One cannot assume to make high returns while making an investment in mutual funds.

So, it is best to get a good return in the long term other than the short term. Share market is the best place to make a good return in less time. But risk factors will be double.

Money control

In mutual funds, money will be monitored by the fund managers. One doesn’t have a kind of control over the investment. Sometimes it fell insecure about the scenario.

Investment in mutual funds are always feeling empty and doesn’t have any kind of control over the cash flow or management.

These are some of the basics of mutual funds. So, in the end, one would be got the answer to a question like

  1. What is Mutual Fund?
  2. Advantages of Mutual fund Investment
  3. Disadvantages of Mutual fund

Finally, this is the common knowledge about mutual fund investment one should be aware of.

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