Mutual Funds is a market-linked investment option. All Mutual Funds are registered by the SEBI. Therefore, an investor with the help of the fund manager can invest in small amounts to fetch a huge capital gain.
How to invest in Mutual funds?
Here’s a quick guide to knowing how to invest in mutual funds.
- Have a clear investment goal: You should be clear about your purpose. Firstly, how much you want to invest. Secondly, how long you want to invest. And finally, how much return you want.
- Know your risk profile: You should clearly know your risk tolerance.
- Choose investment medium: There are several ways to invest in mutual funds. You can choose an offline or online fund manager. Moreover, you can invest through different mobile apps as well.
- Get your basics clear: Since you are investing your hard-earned money, you should study a bit about mutual funds. Therefore,learn about the types of mutual funds, terminologies and the market trends.
- Choose the mutual fund: You have to choose the mutual funds to invest in.
- Do the paperwork: You have to comply with the KYC guidelines. Thus, you have to submit the required documents.
- Invest: You can finally invest on the desired mutual funds through your fund manager.
Mutual fund benefits
- Professional management: Expert fund managers handle mutual funds for you. Hence, they keep track of the market to generate favourable returns for you.
- Higher returns: Mutual funds can deliver higher returns than other investment options.
- Low-cost: For instance, you can start investing in mutual funds even at Rs. 100. Thus, it is a low-cost investment giving high returns.
- Diversification of risk: Mutual fund portfolios allow investors to invest in different funds. Hence, this reduces the risk of negative returns on the entire investment
Mutual funds investment calculator
Returns can be calculated even before investing. This can be done by using a mutual fund investment calculator. You can get it online easily. You have to enter the following details in the calculator.
- Select the mutual fund you are planning to invest.
- The amount you want to invest
- Mode of investment: Lumpsum or Systematic Investment Plan (SIP)
- The period of investment
The mutual fund calculator shows the expected returns within a few seconds. However, the result is shown based on the recent trend of that mutual fund.
How to choose right mutual funds?
Certain factors help to choose the right mutual fund for you.
- Your risk tolerance profile.
- Period of investment
- Investment mode: Lumpsum or SIP
- Return expected.
Moreover, you should think about the liquidity you want. This is because most mutual funds have a holding period. You can use the above factors as filters. Thus, you can easily choose the right mutual funds.
Best mutual fund for SIP
- Axis Bluechip Fund
- Mirae Asset Large Cap Fund
- SBI Magnum Multicap Fund
- SBI Bluechip Fund
- ICICI Prudential Bluechip Fund