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Why invest in mutual funds? First define the notion of mutual funds. These are funds where money is collected from investors to form a common pool and then deployed in different asset classes (equities, debt, etc.) to meet certain investment objectives. When you buy shares of a company, it makes you a part owner of the company and its assets. Similarly, if you purchase a mutual fund you own a part of the assets of the fund. Mutual funds as an investment option is really great compared to other avenues of investment especially when the capital to be invested is small in size and scope of an investor to conduct a detailed market study is minimal. The advantages are – 1) The portfolio diversification: the mutual funds invest in a well diversified portfolio of securities. This allows an investor to hold a diversified portfolio regardless of the amount invested. 2) The diversification of risks: that investments are made in a well diversified portfolio, the risk of investing directly in one or two stocks or other debt instruments is also reduced. Any loss in companies or sectors gets off-set by gains in other companies or sectors 3) use SIP: SIP stands for Systematic Investment Plan. This allows an investor to invest regularly with whatever small amount, may invest without regard to time the market. 4) Professional management: The fund manager people are professionals who have achieved the skills of money management and technical tools and research needs of both business behind them. So we can be sure that the money is in safe hands. 5) Reduce transaction costs: When you invest directly, he must bear all costs such as brokerage or custody of securities. Here, mutual funds enjoy economies of scale, “according to the Fund pay less in costs due to trading / investing in larger volumes. 6) Liquidity: Mutual funds are highly liquid. We may sell units to the fund, it is an open-ended, or we can also sell the units in a purse, if a question closed funds. 7) the big investment objectives: Generally, you can opt for growth or dividend option of the same scheme of a mutual fund. If you want to accumulate wealth, he can go for growth option and if he needs a regular income from his investment, he can choose the dividend option. 8) Various Services: Offices of mutual funds offer various services e. g. , Can easily transfer / switch their holdings from one scheme to another. Purchase / sale of units may also be done by Internet, mail or other means of communication. Fund houses also provide updated market information. Although there are some drawbacks, but investing in a mutual Fund is worthy. The defects are: a) there is no direct control over the decisions of fund managers from day to day operation of various schemes b) investors should be happy with the portfolio of the common system, regardless of its appetite for personal risk. However, taking into account the various benefits that the investor benefits from a mutual fund makes a much better option than other investment avenues.