May 09, 2018 4 min read

How to Invest in Mutual Funds? Here’s All You Should Know

Read this blog to find out how you can initiate your investment in mutual funds.
There’s rising clout of mutual funds not only in India but worldwide. The industry has grown sixfold over the last 10 years. Almost everyone is talking about this investment option and showing interest to invest, however, there are still many who are clueless about how to invest.

As an answer to our several aspiring investors who are willing to initiate their first step in the world of mutual funds, here we have mentioned the details using which you can begin the process of mutual fund investment effortlessly.

So, let’s get started!

The person who risks nothing does nothing.”

Making mutual fund investing is one of the most favored ways to create the desired corpus. There’s some risk associated with this investment option, and that’s why you need to be aware of the basic points to prevent yourself from making big mistakes in the future. Here’s how you can invest!

  1. Quantify Your Goals 
    List out the goals you wish to fulfil. Work out with numbers; think how much amount you’ll need to invest to fulfil a particular objective. Mutual fund industry has different products concerning different goals.
    The idea is simple here, If you’re aiming at a short-term goal that needs to be achieved in a couple of years, then invest in a debt scheme. With a short-term goal in mind, you cannot expose yourself to higher risk.
    On the other hand, if your financial goal is required to meet after five years or more, invest in an equity mutual fund scheme. These schemes have the potential to offer superior returns than other asset classes over a long period.
  2. Hire an Expert Advisor 
    When investing in a mutual fund as a naive or someone who is not well-versed in this field, you must hire a financial advisor. The expert helps you examine your monetary goals and can even recommend some good funds to invest in. Further, it will be easier for you to keep track of your investments and rebalance your portfolio at regular intervals.
    Besides, there are two modes through which you can invest in mutual funds. To learn which mode is suitable in your case, you need to consult an advisor. For more information in this regards: Read Comparing SIP or Lumpsum? Here’s What Experts Want You to Pick
  3. Take Charge of Your Investments 
    It is often said, “if you can’t understand it, you cannot do it.” To invest in mutual funds, it is very important to understand the product first; even if you’ve hired someone to advice you. Learn to take care of basic formalities such as keeping track of investments, change in portfolio, market fluctuations, etc.

Additional Steps:

  1. Keep Your Documents Handy 
    The transactions that you make in mutual funds need to be well documented. You need to be KYC compliant, which is nothing but due diligence of your personal details like the submission of the address proof, photograph, date of birth certificate, and PAN. Further, you need to fill in the form of the respective scheme where you are going to invest. If you choose us, you can opt for an eKYC process which is a paperless Aadhaar-based process for fulfilling KYC requirement to start investing in mutual funds.
  2. Bring Your Curiosity Out 
    Find answers to even the slightest of doubts that you’ve regarding mutual funds. Make sure that you know all the ins and outs of your investment, even if you hire an expert, so that people don’t take advantage of your situation.
  3. Remember, ‘Diversification’ 
    Every mutual fund scheme offers the benefit of diversification. You can further diversify your portfolio by choosing from a wide range of products. This step should be performed keeping your age in mind. Although there is no hard-and-fast rule to it, you just need to reduce your exposure to risk as you head towards your retirement age.
  4. Keep the Costs Low 
    With increasing trend, there’s a sudden increase in mis-selling of mutual funds too. To prevent yourself from being a victim, it’s better to check the additional cost you need to bear with your investment in any fund. This includes exit load, entry load, and tax(if any).

When Should You Start Investing?

There’s a Chinese saying which states, “The best time to plant a tree was 20 years ago. The second best time is now.” We hope you have got your answer to the above question. Always remember, there is no point in delaying investment in mutual funds. Even now if you have any doubt in your mind concerning investment, call us. We will help you step-by-step in this context.

Also, you can get the best recommendations in mutual funds according to your portfolio from the experts associated with MySIPonline.