Hey there, investors! Have you ever been in a position where you need quick cash, and selling your mutual fund investment seems to be the only option available? These situations not only disrupt your long-term growth plan but many times make you vulnerable to a financial trap. Well, worry not! The best solution at a time like this is to get a loan against your mutual funds (LAMF), which can be a great way to access funds without disturbing your investments. LAMF is a powerful instrument to leverage your existing mutual fund investments to meet your financial needs quickly. Let us get an overview of the advantages that make a Loan Against Mutual Funds one of the most opted choices in today’s time.
Get Easy Access To Quick Money Without Selling Your Mutual Funds –
Most people opt for selling investments as the single option for raising capital during the time of emergency. This step not only hampers your overall asset but also makes you sacrifice the purpose with which you have started investing.
The biggest advantage you get with LAMF is that it allows you to tap into the value of your mutual funds without actually redeeming them. You can get a secured loan using your mutual fund units as collateral.
Enjoy Lower Rate Of Interest In Comparison To Personal Loan –
Whenever one faces any financial need their go-to solution is often to take a Personal loan. However, the most significant problem with personal loans is their high rate of interest which not only puts a burden on your pocket but also hinders your ability to save once your financial need has been addressed. Whereas, Loan Against Mutual Fund investments are offered at a lower interest rate when compared to Personal Loans, thus making it a more favourable option.
Check Your LAMF Loan Eligibility
Earn Uninterrupted Return On Your Mutual Fund Throughout The Loan Period –
In many cases, the need for money arises during the tough economic times of a country. This can lead to the selling of mutual funds at low levels, sometimes even at a loss, to obtain the money. On average, a bluechip mutual fund gives an approximate 12%-15% return on investment year on year. You lose this return whenever you raise capital by selling your mutual fund unit. But when you choose a Loan Against Mutual Fund, you get money without selling a single unit of your mutual fund. This keeps the money growing in the fund while you meet your temporary cash needs.
Get Loan Money In Your Hand Quicker Than Normal Loan
Getting all documentation done correctly is one of the major hassles that you have to go through while taking a loan. The loan process for a normal loan contains various legalities thus making the process lengthy. Whereas, for most Loan Against Mutual Funds, there is almost zero paperwork. This is because the information about your mutual fund type and value is obtained directly from your depository after your permission. This process not only makes your loan process quick but also reduces the number of verifications from the lender’s side.
Save Yourself From Various Taxes And Charges-
Whenever you sell any of your investments, you need to pay various taxes and charges to the government, depositaries and exchanges. These taxes can easily eat away more than 10% of the total profit you have earned on your profit. Even when you take a Personal loan, you are not eligible for any tax benefit on EMI you pay. However, this is not the case in Loan Against Mutual Funds. Most of the time the interest you pay on Mutual Fund Loan is tax-deductible. To know whether your Loan Against Mutual Fund interest is deductible or not contact Neoble- the fastest-developing LAMF startup in India.