How to invest in mutual funds: Step by Step GuideAre you one of those who always wondered to invest in Mutual Funds but couldn’t? Always been confused about how to invest in them? Here comes a sigh of relief for you. We have jotted down here the complete information about the Mutual funds and how to invest in them.

What are Mutual Funds?

Mutual Funds are the pool of money managed by the Asset Management Companies (AMCs). They have Fund Managers who shoulder the responsibility of managing and monitoring a fund. Thus, the money collected from the number of investors who share a common objective is then put in stocks, bonds, debt instruments, and multiple other money market securities.

Why should You Invest in Mutual Funds?

Mutual Funds?

Mutual funds have so many benefits but to name a few, the following will be on the top of the list.

-If we compare the results that FDs, NSCs, PPF, etc yielded and what Mutual Funds give then Mutual Funds are at a higher position. The results you receive from most of the funds are exempted from taxes (equity) or offers attractive tax benefits (debts) when held for a longer duration.

– Mutual funds are managed by professionals. They keep an eye on the trends of the market. With the experience they have, they know when to sell or buy the most appropriate stocks at the right time; to gain the maximum and favorable returns.

– Mutual Funds can be subscribed at a low cost. You can start investing in mutual funds with as low as of ₹5,000 or ₹500 for monthly Systematic Investment Plan (SIP).

– Investing in Mutual Funds has become convenient. Many fund houses provided an online facility for investment. Just a click away you are for initiating investment in the funds. Now, with the facility available for KYC online, an investor can invest up to ₹50,000. But, for an amount higher than this, physical KYC has to be done.

– Diversification is the key attraction of mutual funds. Since the money is invested in diversified stocks and asset classes, the gains are generated anyway. Even if an asset/stock is not performing well then the performance of the other asset can strike a balance in returns.

In Detail: How to Invest in Mutual Funds

Before you make up your mind to invest in a mutual fund, it is important to keep the below points in mind.

Figure-out the aim of Investing

This will count as the first step towards investing in a mutual fund. You must have a clearer picture in mind, why are you putting your money in funds. Is it for buying a house, child’s education, wedding or retirement, for what? You should be clear about how much wealth you have to accumulate and within what time.

Know Your Customer (KYC) requirements 

If you want to invest in a mutual fund, then you need to comply with the KYC guidelines. For this, you need to submit copies of Permanent Account Number (PAN) card, Proof of Residence, age proof, etc. as specified by the fund house.

Get the complete knowledge of the schemes available 

Gain the complete insight about the suitable mutual fund for you, Mutual Fund Market has been bombarded with options. Choose what suits your requirement, your risk appetite, and your affordability. Seek the help of an advisor if confused.

Consider the risk factors 

Remember- Mutual Funds are subject to market risk. Keep this mantra in mind- Higher the return, higher the risk. You can invest in equity schemes giving higher returns while debt schemes give a moderate return.

For more updated information related to the market, listen to the podcast ‘Paisa VaisaPaisa Vaisa (Hindi) in Hindi | हिन्दी मे | KUKUFM, Money with Monika  The panacea for all the investment problems.


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