Fintech Makes Mutual Fund Investments Attractive

Ease of keeping records

Photo by Katie Harp on Unsplash

Mutual funds have been globally acclaimed for their qualities in providing the benefit of savings and investments to people. They offer a lot of liquidity as they have many plans in which you can invest.

Some plans are so flexible that you can offload your money immediately. They are called the open ended plans. However, they provide less returns than closed-ended plans, which are for longer durations and cannot be tampered with until the time period ends.

What is a mutual fund? A mutual fund is a financial intermediary. It offers the benefit of investing for small investors.

They collect small savings of people and through this collection, their reservoir becomes very big.

They then invest in different types of investments like equity, debt, a mix of both, index funds, exchange-traded funds, gold securities, land, real estate, or just about anything which will give a good return.

A mutual fund is a little different from equities. Equity is called a share of stock, but a mutual fund gives a unit as an investment.

Why are mutual fund investments attractive to people? They promise to give a steady return with less risk than equities do in the stock market. Those who are newbies and have just begun to earn their monthly income must begin to save early. They must know the reasons for investing in a mutual fund.

A mutual fund has the following advantages:

(a) Return: It has a steady return with much less risk than purchasing from the stock market.

(b) Convenience: Expert fund managers are hired as portfolio managers. They are experienced and have a good knowledge of balancing investments and making a portfolio to get the best returns for people.

( c)Variety of plans: The fund has different kinds of investment plans and they suit the needs of all the people, They have open-ended plans, closed-ended plans, systematic investment plans, unit-linked insurance plans. In many countries, dividend income is non-taxable as well.

(d) Ease of investment: An investor has to make a plan and does not have to worry about what to do in the stock market. After investing the money, the mutual fund takes over and makes its own estimates of the performance of stocks and how to evaluate them. It reviews the investments and makes changes according to the advantages that the stocks combine.

(e)Diversification: Stocks that are invested in different industries give good results. The mutuals funds have large chunks of the amount at their disposal and they can diversify and get good results.

(f) Recordkeeping: No records are required to be maintained by the investor. He does not have to review or shift his investments or change them. The mutual fund does it all. It reviews, shifts, transfers, and records all this in its books.

The advent of fintech and how it has helped the investors and mutual funds.

The mutual fund has so many functions to perform. Ever since fintech has arrived on the scene, things are fast and even more convenient. Fintech is nothing but finance being done with technical help. It has become digital and now everything is online.

#1. Online records: Mutual Fund Investments are now online. With a click of a button, investors can check their balances, returns, the quantity they own and what they have sold online.

How do they do this online viewing?

Each client is given a unique code and an ID Number. So no more rummaging through records to check them. They can now be seen on the laptop and even on the mobile phone.

#2. Calculation of Interest: Interest has to be calculated by the mutual fund for every investment that they offer. Time value tables have been calculated online.

How does it help to have online calculations?

Mutual fund managers must know the interest calculations for monthly saving investment plans, to know the equated monthly amounts that they have to collect from the customers every month. The investor should also be informed about the amount that he has to pay. Going digital with these calculations is a big boon for the small investors.

#3. Paperless : The transactions of the mutual funds have become absolutely paperless.

Does this help the investors?

This helps both the investors and mutual funds themselves. The investor’s have their own identity. They log on and have no requirements of keeping paper records at home that they are investors. The mutual fund also is to a great extent paperless and keeps back ups in case of digital failures

#4. Digital transactions: New investments do not require the fuss of going to a mutual fund.

The important takeaway

A new investment can be taken digitally and when the term ends, it is automatically credited to the account of the investor. All transactions can be made without delay.

There are reminders and so the investor is alert about his transactions. The mutual fund benefits from the fact that it does not have to wait for due payments and rarely are the payments overdue.

#5. Information about new products. The mutual funds have many schemes and they keep on adding schemes and removing old and redunant schemes.

The fintech platform helps.

It is difficult to inform investors of new schemes of the mutual fund through direct interaction as the products keep on increasing. You do see many advertisements on the television channels or on billboards but the fastest way that the information travels is through newsletter that reach the target group of people directly in their inbox.

To conclude fintech has made important dynamic and innovative changes in mutual fund investments globally. All the products can now be purchased online, they can be viewed online with unique client identification. They are very attractive as sitting in your house somebody invests for you, sends you tips, lets you know the interest and the amount to be paid without any manual interventions. Amounts can be paid online and there are less defaults in payments. The time value tables help you to compound or discount the outcomes of your investments digitally. The mutual funds also benefit as their client base increases with information on products through newsletters through emails, making mutual fund investments attractive.

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Fintech Makes Mutual Fund Investments Attractive was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

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