If you have ever thought of investing your money, then you definitely have heard about terms such as Fixed Deposits, Stock Market, Mutual funds and so on. And all these are very popular and the best ways to invest your money. But in recent times there are quite a lot of ads are suggesting us to invest in mutual funds. So the question is how to invest in mutual funds?
There are quite a lot of ways that you can follow to invest in mutual funds. Even in recent times, there are quite a lot of apps out there which allows you to invest in Mutual Funds. However, to make you understand in a better way, I am going to share a complete guide on how to invest in mutual funds.But first, let’s understand why it would be a profitable idea for you to invest in Mutual Funds.
So let’s just head into the topic without wasting much of the time:
Why should you invest in mutual funds?
One of the top reasons why you should in mutual funds is that mutual funds work like an investment vehicle that will help you to grow your money over a long term. And what mutual funds do to grow your money is that it invests your money in a variety of things like equity, debt, money market and others. So you can get a great return for your investments. However, apart from these, there are a few other reasons are there why you should invest in mutual funds:
Professional management
The best part of mutual funds is that there is a professional fund manager who handles all the research part. And invests your money in profitable markets and stocks and buy and sells them at the right time. As a result, you do not have to take the headache to manage your investment something that you do in stock marketing. Instead, the fund managers will analyze the market and do proper research of the firms before investing your money. So you can get high returns.
The other good part is that, whenever you choose a company for investing in mutual funds, you will be able to get to know about the fund manager. When you purchase a mutual fund scheme, the scheme will offer you detailed information about the fund manager. Like how many years of experience your fund manager has or what kind of funds he/she has managed in the past. As a result, you will be able to get a proper idea.
Higher returns
Another reason why you should invest in mutual funds is that it offers you higher returns. Although, the risk is there. But it offers you high returns when you compare your investments with Fixed Deposits (FDs), Recurring Deposits (RDs) and others.
There are quite a lot of instruments where you can invest your money and get high returns. One of them is the “Equity mutual funds” which offers a high return to the investors. However, these types of instruments also have a high risk. There is also the “Debt funds” instrument which have a lower risk and offers better returns compared to the term deposits.
Diversification
One of the best reasons to invest in mutual funds is the diversification. Mutual funds always invest your money in different assets like classes, stocks. As a result, it reduces the risk of your investment portfolio.
Also, another good reason is that, if one of your assets is not performing well, then the other assist can still offer you great results. So your whole investment will be balanced, and you will still be able to get great returns.
Easy To Invest
If you ask me how to invest in mutual funds, then I would say the whole process is extremely easy. There are quite a lot of websites are available out there which is offering online options to invest in mutual funds. From submitting your documents online to investing your money the whole process can be done by making a few clicks.
Low cost
Investing in mutual funds is extremely low cost, and almost everyone with different income can invest. Since mutual funds allow you to make an investment of as low as Rs.5000 (lump sum) or if you want to go for a monthly investment plan then you can do it by paying Rs.500 for a monthly SIP (Systematic Investment Plan). Also, there are no extra charges that you will need to pay to the agencies.
5 things to consider as a first-time investor
Fix an investment goal
First of all set an investment goal. Like how much you money you are planning to invest. This would help you to decide which mutual fund tenure would be perfect for you. Also, ask yourself what is your purpose of investing in mutual funds? Investment always works great with a purpose.
Choose the right fund type
Choosing the right fund type would be a tough task as a beginner. You need to do your own research about mutual funds before you make your first investment. However, there are experts who recommend the first time investments to invest in balanced or debt fund. As these type of investing instruments has a low risk.
Choose one mutual fund
There are thousands of mutual fund schemes are available out there. But as a first-time investor you cannot invest in all of them. Instead, select one mutual fund which has performed well in the last 6 years, also do check out the fund manager details, expense ratio and other details. Then select one mutual fund and you are all done.
Diversify your portfolio
Investing in one mutual fund can also be a risky deal. Hence I would recommend you to invest in more than one mutual fund. This way you will diversify your funds and you will get good returns. But if you are not sure, then you better stick with one plan.
Go for SIPs instead of lump sum investments
There are quite a lot of benefits of going SIPS. Like it spreads your investments over the market and invests your money at different market levels. But when you invest in a lump sum it always looks for an opportunity to catch a market peak and high risks are involved in it.
How to Invest In Mutual Funds?
There are quite a lot of ways to invest in mutual funds. Some of these ways are the:
- Offline Investing with a fund house.
- Offline investing with a broker.
- Through A Website
- Through an App.
Now let me explain each of these ways one by one:
Offline investing with a fund house
You can invest in mutual funds by taking help from a fund house. If you have any fund house in your area. Simply visit them with all the required documents like an aadhaar card, pan card, bank statement, and other details. And they will guide you through the whole process. However, they will charge you some bucks for the process.
Offline investing with a broker
A mutual fund broker is someone who will help you to invest in mutual funds. Your broker will provide you with all the help and information that you require to invest in mutual funds. However, a broker will charge you some bucks throughout the whole process.
Through A Website
Mutual funds houses nowadays also offer the investors an online portal to invest in mutual funds. All you have to do is find a perfect suitable website for yourself. Then create an account with them get done with the e-kyc, and you are all set to make your first investment. These websites offer you all the details which will help you to understand about a fund in a better way.
Through An App
Nowadays there are quite a lot of apps are available which lets you invest in mutual funds. These apps are extremely easy to use it lets you invest in schemes like balanced funds, equity funds, tax saver funds and so on.
Also for each of the mutual fund plan, you will get details like performance growth, fund manager details and so on.
So that was a complete guide on how to invest in mutual funds. Now go ahead and look for funds to invest in. Also, if you need a further guide, you can comment below, and I will help you out with all your questions.
