How To Invest In Mutual Funds, Its very easy to invest in Mutual funds. Mutual Funds are a smart way to grow your money. They can help you achieve your financial goals.Mutual funds offer a pool to your money with other investors and gain exposure to a diversified portfolio of stocks, bonds, or other assets. Let’s learn below.
Table of Contents
What Is Mutual Funds?
Mutual Funds is a pool of Money which is invested and managed by professional money managers also known as Fund Managers. A professional Fund Manager is responsible for allocating all the money at the right place like stocks, debts, etc. It offers automatic investment in a diversified way and lower investment risk than buying stocks on your own because most of the stocks hold diverse holdings across multiple places/stocks.
A mutual fund is a portfolio of stocks, bonds, or other securities purchased with the pooled capital of investors also they give individual investors access to diversified, professionally managed portfolios. These funds hold much of the retirement funds of middle class people and others. It is amazing option to grow your money and create wealth.
Steps to do before Investing in Mutual Funds
Risk Profiling – It is important to understand your capacity and risk tolerance. Knowing the amount of risk you can take before investing in Mutual Funds is Important.
Asset Allocation – After risk profiling it is important to understand your asset allocation and divide your money on different asset classes. Mix of Equity and Debt, Equity, Large Cap, Mid Cap, Small Cap, etc.
Performance Check – It is important to check past performance and investment goals for comparing Mutual Funds.
Select and decide the Mutual Fund Scheme and decide which mutual fund you want to invest in. Make sure to keep follow-ups as it is very essential to get better results and good profits.
Account Opening – How To Invest In Mutual Funds
You can choose a reliable broker according to your preference and trust once you have opened a account and completed your KYC your account shall be activated to start investing. Their are so many types of Mutual Funds so please do monitor the past returns and asset management/allocation and make your decision wisely. Mutual Funds are subject to market risks, please do read all the scheme related documents carefully before investing; but making a right wise decision or long duration investment like 1+ year can give amazing returns. Best personally recommended platforms would be Zerodha, Groww, Angel One & Upstox.
Investment Types
Mutual Funds have many Categories to choose from so please choose as per your requirements. Categories are Equity, Debt, Hybrid, Solution Oriented and Others. The ones with best returns would be Small Cap or Flexi Cap they have potential to make 40%+ returns per year but also they are risky as they are splitted across multiple holdings and can be volatile, Large cap are the safest as the money pool is splitted between Large Companies but however the returns are 8-15% can be better sometimes. Below is a pic of Coin – Mutual Fund Platform by Zerodha.
You can either start a SIP which stands for Systematic Investment Plan where you pay a certain decided amount by you every month on whichever date you choose or a Lump sump which is a fixed amount like a one time payment. Once you make the payment it can take up to two days for funds to start reflecting on your Mutual funds dashboard and also you can also keep checking mail, you do get a instant mail and once the mutual funds are allotted you do get a mail from the Fund house, example- SBI, Blue-chip, ICICI, Parag Parikh, etc.
Conclusion – How To Invest In Mutual Funds
Investing in Mutual funds, all you need to do is open a account on your preferred platform and choose the right Mutual Fund which suits your requirements, monitor and research well about the Fund Scheme and allocation. If you’re making a investment of a huge amount, don’t put all your money in one Fund. Split it and invest in atleast 3-4 Funds. Consulting a financial advisor is a wise choice if you plan a SIP or a long term holding of your Mutual Funds. Investing in Mutual Fund is a very wise decision as it has given better returns than a Fixed Deposit and also is very good option to grow your money and also keep the proper track of your money on the app/website itself in the dashboard section.
Hope today I was able to guide you with the basics of How To Invest In Mutual Funds and I wish you the very best of luck to start your Investment now. Thank You for reading the article till here it really means a lot, have a amazing day! Please do feel free to check my other articles at Solutions With LA.