How Can I Invest in Mutual Funds in India
Recently, an IT professional whom we knew came up with an interesting question: “What is the easy way around investments in India? How do I start?”
Even though he knew about mutual funds, he did not know the investment process. In this article, let us see how you can invest in mutual funds in six simple steps:
Set Goals: One of the benefits of a mutual fund is that you can plan the investment for your financial goals. Before you start, determine your time horizon and risk appetite. This will help you choose the type of fund to invest in. Tax planning can also be a valid goal as dividends from mutual funds are tax-free and can be reinvested to grow the investment.
Allocate Funds: Now, prioritise your goals based on the desired returns and urgency. Depending on your risk profile, allocate funds between equity, debt or hybrid funds. It is essential to balance investment in equity and debt funds to even out the risks.
Research Thoroughly: Analyse past trends of the fund and the performance history of the fund manager. Consistent past performance through varying economic cycles is a fair assurance of a fund’s reliability. Also, understand the composition, terms and objectives of the mutual funds you intend to invest in. As the mandatory announcement for mutual fund goes, “Read the offer documents carefully before investing.”
Plan your SIPs: Systematic Investment Plans (SIPs) are a safe and popular way to invest in mutual funds. It allows you to buy units of a chosen fund within a budget over a while. Most experts advise SIPs in equity-oriented funds as they can overcome market volatility.
Seek advice: Seek professional guidance to identify products that meet your life stage requirements and to time your investments. If you choose an online portal or a professional, you will benefit from the in-depth knowledge about the classes of funds and the risk attached to it.
Select mode of investment: You can invest in mutual funds either online, offline or through apps. Remember to submit your Know Your Customer (KYC) documents such as PAN card, identity proof, address proof and a photograph to the Central KYC (CKYC). Online portals are usually integrated with the CKYC to enable quick compliance with legal requirements.
Mutual funds do not require you to have a Demat account. Also, you can access them with ease. Information about different funds are available, so make sure you read about them before investing. Note that even after you invest in a mutual fund, it is essential to review the performance of the fund at regular intervals. FundzPark’s robo advisory can assure that your portfolio will be automatically rebalanced to provide you with the best available returns. Sign-up to our services now at www.fundzpark.com.