Everyone wants to invest their money and create wealth. What if I tell you that you can invest your money and some professionals will manage the money on your behalf?
Yes, it is possible through Mutual Funds.
In this blog, I will cover how to invest in mutual funds.
What are Mutual Funds?
Mutual funds are investment options that pool money from multiple investors to invest in diversified portfolios of stocks, bonds, or other securities. Expert fund managers handle these funds and make investment choices for the investors. Mutual funds offer diversification, professional management, and liquidity, making them a popular investment choice for individuals looking to invest in the financial markets without directly managing their investments
5 Steps to Invest in Mutual Funds
Anyone who wants to invest in mutual funds can follow these six steps:
- The first step to investing in mutual funds is to identify your risk level and capacity. By identifying the risk capacity, an investor can align their investment choices with their financial goals with market fluctuations.
- Asset allocation is the next step after risk identification. In this step, you can divide your money across various asset classes like equity, debt, and commodities to mitigate the risk factor. Asset allocation can help manage liquidity so that investors can invest in more liquid assets.
- The next step is to find the best mutual funds based on your financial goals. At this time, thousands of mutual funds are present in the market. You can compare them based on their returns and performance.
- Now you have selected the best mutual fund scheme for yourself. In the current step, you can start the application in either of the modes: offline or online.
- Now the last step is to monitor your fund and make it more diverse to get some more gains. Diversification can provide you with some higher returns.
Why you should Invest in Mutual Funds?
There are multiple reasons why you should invest in Mutual funds given below:
- Higher Returns
- Everyone wants to get returns from their investment added with minimum risk. Mutual funds can be your best investment with higher returns and minimum risk. Compared to Fixed Deposit(FDs) and Recurring Deposit(RDs), mutual funds provide higher returns.
- Equity mutual funds are the best opportunity for those investors who want to get higher some good returns but some risk is associated with it. Debt mutual funds are ideal for those who want some steady return with the least risk.
- Diversification
- Diversification is the best feature of mutual funds. You can reduce your risk by investing in a variety of instruments like equity, debt, and bonds.
- If one asset is not performing well then others can manage to reduce your loss and you can enjoy favorable returns from Investments.
- Inexpensive
Mutual funds are a low-cost investment as compared to any other assets. You can start your investment with just Rs.5000 in lumpsum and as low as Rs.500 through SIPs. You don’t have to wait to accumulate a large wealth for investment.
- Professional Management
- Mutual funds are managed by professional and experienced fund managers. These managers track the market and select the right stock for you.
- The fund Managers look at how well companies have done before they decide to invest in their stocks. When you buy units of a mutual fund, you can find information about the fund manager in the document for that mutual fund. This will tell you about the manager’s work experience, the types of funds they have managed, and how well those funds have done. This can help you feel confident that your money is being managed by an experienced professional.
Read More: Save your tax by Investing in ELSS Mutual Funds
How to Invest in Mutual Funds Online?
It is essential to know how can you invest in mutual funds in online mode, As it is easy to apply online and more favorable.
- Through AMC Website
You can apply to mutual funds through the Assets Management company’s website directly. You can find funds for different categories to invest in. You can follow the instructions present on the website, fill in all the required information, and submit it. Aadhaar number and PAN card will be required for complete KYC data. After verification from the backend, you can start investing.
- Through Broker
Many Assets management companies allow you to apply through your favorite broker like Zerodha, grow, Angelone, and others. The broker’s app and websites allow investors to invest in Mutual Fund Schemes, see their account statements, buy or sell units, and check other important information about their investments. Also, investors can invest in different funds from various fund companies.
How to Invest in Mutual Funds through SIPs?
- Before investing in a mutual fund, you need to complete your KYC. You can do this online by filling out a form and providing identification and address verification.
- Then, go to the fund company’s website and choose the mutual fund plan that suits your needs.
- Apply for an account by providing your details, such as name, phone number, PAN number, and creating a username and password.
- Enter your bank account details and set up the SIP auto-debit amount, and you’re finished.
- To select a mutual fund plan, log into your account at the fund company.
- For monthly SIPs, you make the first payment online and the second one 30 days later, once the AMC has informed you of the date.
- You can continue the SIP for as long as you want, it’s your choice how long it will last.
How to Invest in Mutual Funds through Lumpsum?
You can set up a direct investment plan with an asset management provider for mutual funds. You can do this in person or online. To finish your KYC, you need to give a self-attested ID and address proof, along with two passport-sized pictures, to the mutual fund company.
If you want to invest a lot of money in mutual funds using an online platform, you can just go to the mutual fund company’s website and choose your investment plan. To make a one-time investment, just choose the One-Time option and enter the amount you want to invest.
[…] Mutual funds are one of the best ways to earn money from the stock market for those who want to avoid risk and gain some significant returns. It has gained popularity in recent years due to its stable and secure returns. Mutual funds are managed by professional fund managers who do research and find good stock on your behalf. […]