Guide to Invest in Mutual Funds For First Time Investors

Guide to Invest in Mutual Funds For First Time Investors

Before making any investment first and the foremost thing is to be aware of your financial/investment goal. Having an investment goal is very crucial as it will help you to add more clarity to your investment decisions. Have a structured approach towards savings and investment. Based on your goals look at the most suitable investment options and schemes. Assess your risk profile and ask yourself questions about why you want to invest. Get a better understanding to ensure your investment decisions match with your financial goals.

If you are investing in mutual funds for the very first time, here is a guide  for you to refer to before investing in mutual funds.

How does it work? different investors invest money in a mutual fund scheme and then the money is invested by the fund manager in different securities like gold, bonds, equity, debts etc. When you buy the mutual fund, you own a small stake in all the securities of the fund.  Advantages like portfolio diversification, professional management of funds, tax benefit, liquidity make the mutual fund the most viable and popular investment option to invest among first-time investors.

To start investing in mutual funds, you need to be KYC (know your customer) compliant. The KYC process can be done in 2 ways: offline and online. There are a lot of asset management companies that operate different schemes based on different goals.

Based on your financial objectives, decide the type of schemes you want to invest in. Select the right mutual fund based on the long-term or short-term investment. There are equity, debt, hybrid, open-ended, liquid interval, tax-saving, growth funds. Be aware of your risk appetite and invest accordingly.  Don’t forget to check the past performance of monitoring work from home employeesthe funds and ROI before selecting the scheme.

Mutual funds provide  lump sum or SIP (Systematic Investment Plan) investment options. Under SIP,  there is a fixed amount of money that needs to be invested every month on a particular date. The advantage of investing through SIP is you can make an investment with a small amount of money with as little as Rs 500 per month and you benefit from the effect of compounding which ensures exponential growth. It also makes an ideal investment option for investors who are afraid to invest a lot of money because of the fluctuation of the markets. Investing through lump sum requires you to invest at the right timing and a fair understanding of the markets.

Return on investment will vary as per the schemes and the funds. You can monitor or track your investments with the help of the mutual fund tracker.

 Today there are a lot of apps and websites through which you can easily invest and select schemes and funds. You can download the mutual fund app and can start your investment journey. If you are unsure of your investments, consult a financial advisor. Select your goal, find the appropriate fund and start investing.

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