Investing your money wisely is a key step towards achieving your financial goals, and mutual funds offer a straightforward and effective way to do just that. Whether you are new to investing or looking to diversify your portfolio, understanding how to invest in mutual funds can set you on the path to financial success. In this article, we will walk you through the process of investing in mutual funds, covering key aspects from online investment to important considerations.
Mutual funds: A quick overview
Before we dive into the process, let's recap the basics of mutual funds. Mutual funds pool money from multiple investors to invest in a variety of assets such as stocks, bonds, and more. Professional fund managers handle these investments, aiming to achieve the fund's goals while offering investors a convenient and diversified way to grow their wealth.
Explore more about what is mutual fund.
Why should you invest in mutual funds?
Investing in mutual funds can be a wise choice for several compelling reasons.
Firstly, mutual funds offer diversification, which means your money is spread across various assets like stocks, bonds, or other securities. This diversification reduces the risk associated with investing in a single company or asset. Even if one investment performs poorly, it's less likely to significantly impact your overall portfolio.
Secondly, professional management is a key benefit. Mutual funds are managed by skilled fund managers who make investment decisions on your behalf. These experts analyze the market, research potential investments, and adjust the fund's holdings to maximize returns and manage risk.
Another advantage is affordability. You can start investing in mutual funds with a relatively small amount of money. This accessibility means you don't need a large sum to benefit from professional investment management.
Liquidity is another plus. Mutual fund shares are typically easy to buy and sell, providing you with access to your money when needed. This liquidity makes it convenient to manage your investments.
Furthermore, mutual funds offer variety and choice. There are a wide variety of funds available, each with its own investment objective and strategy. Whether you seek long-term growth, regular income, or a mix of both, there's likely a mutual fund to align with your goals.
Lastly, mutual funds are regulated and transparent, providing you with peace of mind. They are subject to financial regulations to protect investors and provide regular updates on holdings and performance, ensuring you have the information needed to make informed decisions.
What are the different ways of investing in Mutual Fund Schemes?
- Visit the nearest mutual fund branch office, Investor Service Centers (ISCs), or Registrar & Transfer Agents (RTAs) with a filled application form, required documents, and payment.
- Online platforms and fund house websites allow convenient online investments in mutual fund schemes.
- Mutual fund investors can also choose to invest through registered distributors affiliated with AMFI, including individuals, banks, or brokerage firms. You can invest in 1000+ through the Bajaj Finserv Platform in just a few clicks.
How to invest Mutual Fund
- Choose a Platform: Start by selecting a reliable online investment platform. Bajaj Finserv Mutual Fund Investment Platform offers a user-friendly interface, comprehensive research tools, and 1000+ fund options.
- KYC Verification: Complete your Know Your Customer (KYC) verification. This involves providing necessary documents for proof of identity like PAN card, and address proof to comply with regulatory requirements.
- Select Your Fund: Based on your financial goals and risk tolerance, pick a mutual fund that aligns with your preferences. Consider factors like the fund's historical performance, asset allocation, and expense ratio.
- Investment Amount: Decide how much you want to invest. Many mutual funds have a minimum investment amount, so make sure to meet that requirement. You can also choose between SIP or lumpsum investment options. You can start investing with as low as Rs. 100 at Bajaj Finserv Platform.
- Payment: Choose your payment method – net banking, debit card, NEFT/RTGS, or UPI, and make the investment.
How to invest in SIP Online
- Choose SIP: If you are opting for a Systematic Investment Plan (SIP), select the mutual fund and SIP option.
- Set Amount and Frequency: Decide the amount you want to invest regularly (monthly, quarterly, etc.) through the SIP. This disciplined approach encourages regular saving.
- Auto-Debit: Enable auto-debit from your bank account to ensure seamless SIP investments without manual intervention.
How to invest a lump sum in mutual fund schemes?
Step 1: Click on ‘INVEST NOW’ on top of this page. You will be redirected to the mutual funds listing page.
Step 2: Filter by scheme type, risk appetite, returns, etc. or choose from the top performing funds list.
Step 3: All the mutual funds of the particular category will be listed, along with the minimum investment amount, annualised return, and rating.
Step 4: Get started by entering your mobile number and sign in using the OTP.
Step 5: Verify your details using your PAN, date of birth. If your KYC is not complete, then you will have to upload your address proof and record a video.
Step 6: Enter your bank account details.
Step 7: Upload your signature and provide some additional details to continue.
Step 8: Choose and select the mutual fund that you want to invest in.
Step 9: Choose ‘Lumpsum’ and enter the investment amount. Click on ‘Invest Now’
Step 10: Select your payment mode i.e., net banking, UPI, NEFT/ RTGS.
Step 11: Once your payment is done, the investment will be complete.
Your investment will start reflecting in your portfolio within 2-3 working days.
Cost of investment associated with mutual fund investment
- Management fee: The management fee is charged by the mutual fund to cover the costs of managing the fund. This fee is typically deducted from the fund's returns on a daily basis.
- Exit load: An exit load is a fee that is charged when you redeem your units from a mutual fund within a specified period of time. This fee is typically charged to discourage investors from short-term investing.
- Broker commission: This refers to the fee charged by a brokerage firm or financial intermediary for facilitating the buying and selling of securities, including mutual funds. This fee is accrued in the Total Expense Ratio of the fund.
Important points to keep in mind before investing in mutual funds
- Your investment goals: What are your investment goals? Are you saving for retirement, a child's education, or a down payment on a house?
- Your risk tolerance: How much risk are you comfortable taking with your investments?
- Your time horizon: How long do you have until you need to access your money?
- Your investment amount: How much money do you have to invest?
- The fees: Be sure to factor in the fees associated with mutual fund investing when making your decision.
- The liquidity: Mutual funds are generally liquid investments, but it is important to check the liquidity of the specific fund you are interested in.
- The tax implications: Be sure to understand the tax implications of mutual fund investing.
Investing in mutual funds can be a smart way to grow your wealth, but it requires thoughtful planning and informed decisions. By following these steps and considering the factors mentioned, you can embark on your mutual fund investment journey with confidence. Remember, each investor's financial journey is unique, so take your time, research thoroughly, and seek professional advice if needed. Your commitment to understanding and managing your investments can lead you towards achieving your financial dreams.
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