Mutual fund, a very popular term, you must have heard about it, but do you exactly know what is it? Mutual fund investment is a section where you let your money earn for you, over a period of time.
In Mutual Fund, numerous investors pool their money in mutual fund companies, which in return invests these amounts of money in purchasing of bonds or stocks. Mutual Fund companies aim to invest the investment amount in good return yielding assets so that its investors can attain again in returns generated. A very small part of the benefit generated is kept by the company and the rest is administered equally among its respective investors, according to their investments.
There are several investment options like FD, stock market, post office, insurance and much more available in the market, but mutual fund Investment is preferred among them, for its easy operations, inflation-beating feature, good returns over a period, diversifying the feature, and many more. These features help an investor to create a strong base for their wealth creation and help them to attain their future goals.
As of now, I can consider, after knowing the significances of mutual funds, you may plan to start your investment in mutual funds, but wait, as a beginner how will you start your investment? Want to know, here, we are to help, read the blog and get to know the steps to start your investment in the mutual fund.
Well, do you know you can start your investment in the mutual fund via both mediums, either online or offline, its completely your choice, but if you are a beginner, in my view, offline mode will be more convenient for you.
So, if planning to start investing in a mutual fund, follow the following easy steps, and enter the world of investment:
- KYC Completion: This is the very first step to be done if you want to start your investment, without Know Your Customer (KYC) registration, a person is not considered eligible for starting their investment. It can be done both through offline and online medium. To get your KYC done online, you can visit the office of any AMC (Asset Management Company) or you can consult any registrar, you can also get it done by any financial advisor. Take a form of KYC, fill it and submit it along with the hard copies of the required documents with the concerned person.
- Recognize Your Investment Goal: The most important step is to analyze your need, your goal, for which you want to start your investment. Different peoples have different investment goals like some people invest to buy a car, build a house, some people invest in their child’s education, some people invest to accumulate money, carry the expenses after retirement and many more. Recognition of investment goal is important, as the selection of mutual fund schemes and the time horizon of your investment is based on your investment goal.
- Analyze your Risk Appetite: Market performance and its value are never the same, sometimes it goes up, sometimes goes down, some people withstand these market fluctuations whereas some get afraid when the market goes down. Before investing, you should analyze your capability to resist market fluctuations. Also, observe your financial stature and fix your amount, you want to start your investment with.
- Select the Type of Fund: As you have already categorized your investment goal, select or go with the investment scheme or instrument, that can help you accumulate capital to attain your financial goal and create a strong base for your wealth generation.
- Choose either SIP or Lump-Sum: There are two modes of investing in mutual fund investment, either you deposit a big amount at a time that is Lump-Sum Investment, or you can pay a fixed amount at regular time intervals, that is SIP investment. It’s completely your choice, which mode you want to invest through, but I would also like to tell you that SIP investment mode is a bit beneficial than lump-sum investment, due to its features like rupee coat averaging and more.
- Decide date and amount of investment – In case of SIP payment one must decide the amount to get deducted each month and the date on which it must get deducted.
- Diversify Your Portfolio: It is said in mutual fund investment, never to stop at one scheme, to earn more benefits and reduce the risks, one should always invest in more than one scheme. Always, diversify your investment in different schemes (minimum of four schemes).
As of now, you must have understood, how to start your investment in a mutual fund. If you have any further queries, you can consult a financial advisor.
You can also mail us at- [email protected], we are here to help you in any way.
Source: Various web sources)
*The write up is on best effort basis and the author doesn’t guarantee about its correctness. Any investment made based on this information will not make us responsible for the same.
(Mutual Fund investments are subject to market risk. Kindly read all the related documents carefully before investing. Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns)