Once you decided to start investment into Mutual funds, first question hits us, how to start the investment into Mutual funds.
Let’s delve into the world of mutual fund investments and explore how to start this journey comfortably and securely. Whether you’re a beginner or an experienced investor, these steps will guide you toward a successful investment experience:
For enhanced readability and comprehension, presenting this article in an FAQ format.
Can we start investment into Mutual Fund completely Online and zero Paperwork
Answer is Yes.
How many Papers requirement to start investment into Mutual Fund
Answer is simple – Just 3 Documents
- Proof of Identity:
- PAN card with photograph
- Aadhaar card
- Passport
- Voter ID card
- Driving license
- Proof of Address:
- Aadhaar card
- Driving license
- Passport
- Voter ID card
- Cheque:
- You’ll need a cheque for either a lump sum investment or for setting up a Systematic Investment Plan (SIP).
- Important – Your Name must be quoted on the cheque Book Leaf
And obviously you need Mobile Number (linked with Aadhaar) and Email ID to create Online Account.
Is there any pre-requisite for opening a Mutual Fund Account
Answer is Yes, there are 2 Pre-requisites.
- KYC (Know your customer)
- PAN and Aadhaar Should be Linked.
Both are doable Online in paperless mode And I will help you in doing this wherever you need my assistance.
To do KYC Online, you need PAN Card and Aadhaar Card (Mobile Number should be linked)
Where to open Account to start investment into Mutual Fund
Today there are many options available, like banks, direct visit AMC office, connect individual Distributors, different Online Platform.
How to choose right Platform to open the Mutual Fund Account
Mutual funds are products with a degree of volatility. One require consistent guidance and frequent updates, especially during periods of market instability. While there is a wealth of information available online, it can often lead to information overload, causing confusion among investors and sometimes steering them in the wrong direction.
So right approach would be choosing a platform with following characteristics.
- A platform who can offer all variety of mutual funds to invest
- Give clear and precise information on progress of every investment
- Have easy to use User interface to Invest/Withdraw the money using Website and Apps
- Have complete convenient to do SIP, STP and SWP. you may read details article here on this topic.
- Most important, you should have answer to all your query just a text/Call away.
- In case you are busy and need immediate support to invest some additional money, you should be able to support and get this done
- If you are busy or facing tech issue and need help in withdrawal of Money, you should get instant help in executing it
- Handholding in volatile time is crucial for all investment. Across the world, various events keep unfolding and which directly or indirectly impact the equity Market. This becomes important in investing journey
- Another Important, you must be getting educated with time with relevant information during the journey to take right decision.
- You must have access to download any type of performance report or download ELSS ( Tax Saver Mutual fund) Certificate Online
Considering all above points, I can advise you the right platform where you will have my continuous Team support as well across the investment journey.
How to select the funds to start investment into Mutual Fund
Once you’ve set up your account, the next step is to choose the right fund for investment. This decision is highly personal and it’s recommended to consult with a financial advisor before you begin. This step is vital in wealth creation, goal achievement, and maintaining long-term investment.
If you’re a young investor with fewer responsibilities, your choices will differ significantly from someone who is nearing retirement in less than 5 years.
Remember, this isn’t a complicated topic. With just an hour-long brainstorming session with your financial advisor, you can easily make the right selection.
Here’s a simplified version of the guiding principle:
- For the young: Consider investing in Equity Mutual Funds, focusing primarily on Small Cap and Mid Cap Funds.
- For those in middle age (40+): Large Cap and Equity Diversified Funds could be a good fit.
- For those aged 50+: Incorporate Debt Funds into your investment strategy along with equity. The proportion of Debt components should increase over time.
- For short-term goals: A balanced mix of Debt and Equity Funds could be the solution.
I will write a separate details article on Mutual Fund Selection, which will be available soon on this portal – meeshifinance.in
Also writing an E-Book on this subject, which will be available free to my subscribers.
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What are the different Types of Mutual Funds
There are several types of mutual funds available, catering to different investment needs and risk profiles. Let’s explore them:
- Equity Mutual Funds: These funds invest primarily in stocks or equities. The returns are influenced by the performance of the invested stocks in the market
- Debt Mutual Funds: Debt funds primarily invest in fixed-income securities like bonds, government securities, and money market instruments. They provide stability and regular income
- Hybrid Mutual Funds: Also known as balanced funds, these invest in a mix of both equity and debt instruments. They are suitable for moderate risk-takers
- Index Funds: These funds mimic a specific market index (e.g., Nifty 50). They have lower expense ratios and aim to replicate the index’s performance
- Sectoral Mutual Funds: These funds focus on specific sectors (e.g., technology, healthcare). Investors interested in a particular industry can consider these
- Tax-Saving Mutual Funds (ELSS): ELSS funds offer tax benefits under Section 80C of the Income Tax Act. They have a lock-in period of three years and invest primarily in equities
- Liquid Mutual Funds: These funds invest in short-term debt instruments and provide high liquidity. They are suitable for parking surplus funds temporarily
To start investment into Mutual Fund, you must understand it and take the decision accordingly.
How many Varieties of funds available under the Equity Mutual Funds
Equity mutual funds offer various divisions based on different criteria. Let’s explore them:
- By Market Capitalization:
- Large-Cap Funds: Invest in the top 100 stocks by market capitalization.
- Mid-Cap Funds: Focus on the next 150 stocks in terms of market cap.
- Large & Mid-Cap Funds: Invest across both large-cap and mid-cap stocks.
- Small-Cap Funds: Concentrate on smaller companies outside the top 250 stocks.
- By Solutions:
- ELSS (Equity Linked Savings Schemes): These funds help you save taxes under Section 80C while earning additional returns.
- Retirement Solutions: Aimed at aggressive saving strategies for retirement planning.
- By Diversification:
- Sectoral Funds: Invest in specific sectors like technology or banking.
- Thematic Funds: Focus on a particular theme (e.g., ESG, consumption, energy).
- Value Funds: Seek under-valued stocks with upside potential.
- Focused Equity Funds: Concentrate on a limited number of high-conviction stocks.
- Contra Equity Funds: Invest against prevailing market trends.
- Dividend Yield Funds: Prioritize dividend-paying stocks.
- Global/International Funds: Invest in world’s top stocks.
- Other Categories:
- Multi-Cap Funds: Diversify across large, mid, and small-cap stocks.
- Large & Mid-Cap Index Funds: Passively replicate the performance of top 100 companies.
- ESG (Environmental, Social, and Governance) Funds: Invest in companies with strong ESG practices.
Remember that each type of equity fund has its own risk-return profile. Choose, right mix of funds, based on your financial goals and risk tolerance to start investment into Mutual Fund.
What should be the Key Mindset to achieve Bigger Wealth
Achieving significant wealth through mutual funds requires the right mindset and strategic approach. Here are five key mindsets to help you build wealth effectively:
- Clear Investment Goals:
- Define your financial objectives clearly. Are you saving for a specific goal (like buying a house, funding your child’s education, or retirement)? Having a well-defined purpose will guide your investment decisions.
- Long-Term Perspective:
- Understand that wealth accumulation takes time. Mutual funds are best suited for long-term investments. Stay committed to your investment plan even during market fluctuations. Patience and consistency pay off in the long run.
- Risk Awareness and Tolerance:
- Assess your risk appetite. Different mutual funds have varying levels of risk. Choose funds that align with your comfort level. Remember that higher risk often leads to higher potential returns.
- Systematic Investing (SIP):
- Regularly invest through Systematic Investment Plans (SIPs). Consistent contributions, even in small amounts, can compound over time. SIPs help you stay disciplined and avoid market timing mistakes.
- Stay Informed and Educated:
- Continuously learn about mutual funds, market trends, and economic indicators. Being informed allows you to make better investment decisions. Stay mindful of your portfolio and adapt as needed.
Now concluding the article “how to start investment into Mutual Fund” with advice to read the two Articles available on this portal which shows how one can create fortune using Mutual fund investment.
Article 01 : How Mutual funds work at different stage of Life
Article 02 : How Mutual fund Work for different financial Status people