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Especially due to its diversification aspect, mutual funds have been highly favoured in India in recent years. With more people wanting to enter the markets safe and secure, mutual funds have sort of become a one-stop destination to begin their investment journeys with. The 2017's “Mutual Fund SahiHai“campaign launched by AMFI (Association of Mutual funds of India) was successful in spreading awareness about mutual funds nation-wide which led to a massive rush of investors deciding to direct their money towards MF.In this article, we will delve deeper into the various investment options available in mutual funds, highlighting their potential benefits and why they may be a worthwhile investment. Additionally, we will explore key factors to consider before participating in mutual funds to ensure you make informed investment decisions.
Ways to invest in Mutual Funds:
- To invest you can submit a duly completed application form with a cheque or bank draft at the branch office or designated Investor Service Centres (ISC) of mutual Funds or Registrar & Transfer Agents as per the mutual funds. Proof of address and identity, a cancelled check, photograph are some of the documents you will need.
- One can also invest online via the websites / portals of the mutual funds of their choice.
- A mutual fund broker or a distributor also acts as a middle person at times and may guide you through the entire process of investment. They provide their clients with all the necessary information and help them pick what suits them the best. Note that they will charge a fee for these services which is cut from the total investment amount.
- You can also opt for investing through the online mode or conventional paper-based mode via MF Utilities Pvt. Ltd. (MFU). you can visit this technology based shared service platform here: www.mfuindia.com
- Like units of stocks or shares one can also invest in mutual funds by simply purchasing them off the stock exchanges. Popular Indian exchanges such as NSE (National stock exchange) and BSE (Bombay stock exchange). For that you need to complete the one-time registration process with exchange of your preference. For more details on NSE – MFSS and BSE - StAR MF, please visit www.nseindia.com / www.bseindia.com
- Independent apps which also have investment facilities in place. In some cases, the maximum brokerage that one has to pay is just Rs 20 per trade. These platforms also possess efficient user interfaces. It's important to read reviews and then choose the one that feels right.
Also Read: Why Are Arbitrage Mutual Funds Becoming Attractive?
Why should you invest in Mutual Funds?
- Diversification: Since your funds are spread across different sectors and kinds of instruments you do not miss out on any opportunities and make the most out of your investments.
- Professional management : If you are inexperienced with the markets then you don't have to worry much because your funds are managed by skilled professionals who rebalance, restructure and monitor the portfolio for their clients.
- Tax benefits: There are ELSS schemes which have a lock-in period of 3 years and can help you save money on taxes. These schemes mostly invest in equities.
- Higher regulation and transparency: Registration with SEBI is a must for the AMCs and other authorities involved in the process. The NAV of the fund is updated regularly, and the asset mix is open for the investors to examine.
- Convenience: It is hassle-free as the funds are managed on your behalf you can invest in MF whenever you wish to as it’s just a few clicks away.
- Low cost: For a very low cost you get the exposure to a wide range of areas which otherwise would be very expensive to replicate if one was to buy every single security individually.
A mini guide to help you pick the right scheme:
- Establish and work on the goals that you wish to achieve. These goals should be specific and can be long term or short term.
- Study your risk appetite and your risk tolerance. It is important to understand the difference between the two. Your risk appetite may be higher than your risk tolerance or vice versa.
- Always be mindful about the time horizon of your goals and other aspects such as age, profession, family background, health, size of your goals…these aspects may help with asset allocation.
- Considering the aspects and your risk profile can now figure what asset mix will suit better.
- Identify the funds that invest in various asset classes . Compare the funds based on investment objective, fund manager history and past performance.
- Pick the mutual fund schemes you would want to invest in and apply online or offline.
- Diversify your investments and monitor them frequently to make the most out of your investment journey.
Choosing the right platform or investment method for MF and a little bit of financial planning can help you achieve your goals more efficiently and effortlessly. Vast pool of a variety of mutual fund schemes are waiting for you out there!
FAQS - FREQUENTLY ASKED QUESTIONS
Do Mutual Funds only invest in stocks ?
No, MF also provides its users a wide variety of schemes- bonds, commodities, indexes, sector specific, capitalization specific etc.
Is it safe to opt for Online Mutual Funds investment platforms ?
Yes, it is safe to invest through the online mode. As the funds cannot stay with the entities as per the new mandate. The new mandate suggests refund of the investor’s money within the same day when not in use.
Can individuals under 18 invest in MF ?
With the help of a Parent/ guardian minors can invest in mutual funds. The kid can be the only account holder represented by the adult responsible.
What documents are necessary to start investing in MF ?
Proof of address and identity, a cancelled cheque, a photograph are some of the documents you will need at the time of registration.
What is the minimum required amount with which you can start investing in mutual fund schemes ?
The minimum investment amount ranges from Rs. 500 to Rs. 5000. But it also heavily depends on the kind of scheme you wish to invest in. Lately some Mutual Fund companies let their clients start investing with an amount as low as Rs. 100.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
