Investing helps you to reach your financial goals without any hitch and aids to attain financial independence and stability in life. Investors today are offered with several investment options to choose from. Some of them are traditional ones that have been into existence since time immemorial, while others are relatively newer options that have gained popularity and exposure in the recent years.
However, a lot of people stay away from investing for a lot of reasons: be it lack of proper knowledge, or not having enough time to follow the markets, or not having adequate savings to begin investing or the inability to afford to investments in large amounts. Also, some investors wish to invest only in tax saving investments as they want to gain tax waiver while others want abundant liquidity in their investments. There is a single solution for all these needs i.e., you, as an investor can invest in mutual funds.
What is a mutual fund?
It is an investment vehicle wherein an AMC pools the money of several investors and invests it in various securities. A fund manager professionally manages this pooled investment and invests it in a combination of various asset classes such as equity mutual funds, debt funds, money market instruments, etc. according to an investor’s investment profile.
These fund managers are experts with exhaustive knowledge about the volatility of the markets. In return, the fund house charges an expense ratio i.e., the annual maintenance fee to manage your mutual fund investments. Let’s understand how to invest in mutual funds.
How to invest in mutual funds online?
Investing in mutual funds is quite simple. Just follow these easy steps:
Identify the objective of investing
This is the primary and one of the most significant steps towards investing in mutual funds. You need to define your financial goals. Identifying your objective would aid you to zero in on the investment options based on the level of risk, expected rate of returns, lock-in period, payment period, etc.
Duly fill the KYC (know your customer) form
To invest in mutual funds, you need to comply with the KYC guidelines. These include submitting copies of PAN card, proof of residency, age proof, etc. as specified by the mutual fund house.
Aware yourself with all the options available
The mutual fund market offers different types of mutual funds for your needs. There are schemes available that suit the needs of almost all investors. An investor is advised to do their homework by exploring the market and understanding various schemes available to them.
Consider risk factors
It’s important to be wary about the risks associated with investments in mutual funds. For instance, equity funds are usually related to high risk and higher returns than other investments. If you have a low-risk appetite, you should consider investing in debt mutual funds.
Remember, your mutual fund investments should be aligned with your goals, investment duration, risk appetite, your affordability, etc. Happy investing!