What are the benefits & risks of mutual funds?

Benefits of Mutual funds are:

• Diversification: Reduces risk by investing in a mix of assets.
• Professional management: Managed by experts with market experience.
• Liquidity: Easy to buy and sell.
• Accessibility: Low minimum investment requirements.
• Tax benefits: Certain funds offer tax advantages (e.g., ELSS in India).

Risks include:

• Market risk: Losses due to market fluctuations.
• Credit risk: Default by issuers of debt securities.
• Liquidity risk: Difficulty in selling fund holdings.
• Management risk: Poor fund manager decisions.