April 22, 2024
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How To Start Investing In Mutual Funds

Mutual Funds

Mutual fund pools savings from varied investors falling under a particular scheme managed by an asset management company. The investors will make money via capital appreciation or earning dividends. The option exists on whether they choose to invest the profits back by regular income or even the reinvestment option. It would be worthy to invest in top tax saving mutual funds because of numerous benefits it provides.

Why make an investment in mutual funds


To invest in mutual funds seems to be a convenient option. With market monitoring and a lot of paper work involved, you stand to gain from market exposure and investment platforms as per your capacity. The option to choose between portfolio rebalancing and funds helps to align investments as per your expectation.

Start off with a low investment

You can choose a diversified investment portfolio and this can start with as low as Rs 500.  You can even invest lump sum or follow a systematic investment plan. When you compare it to lump sum option SIP is an effective way to lower down the cost of investment and cash in on the power of compounding.

Tax saving

Section 80 C of the Income tax provides for certain tax deductions and mutual fund appears to be one of them. In the last few years ELSS has become a popular tax saving option for Indians because of the short lock in period of 3 years and even the higher rates of return.

Fund management in a professional manner

In case of mutual fund the amount is managed by a professional fund manager who has a team of researchers to back them. For the asset allocation he formulates an investment strategy. They gain access to real time financial markets and can update their portfolio accordingly. They do possess investment related skills which retail investors are known to lack.

Points to consider if you happen to be a first time investor

Have an investment goal in mind

Clearly outline your financial goal in terms of objective, budget and tenure is half the job done. This is going to clearly outline the amount of fund you are going to put on to direct mutual fund app

and understand your risk appetite. Investment always has a purpose.

The choice of the right type of funds

Just flip through the various types of mutual funds before you decide what works best for you. Ideally for a first time investor it is better to opt for debt funds as low returns are assured with smaller risks.


Consider diversifying your portfolio and make it a point to invest in 3 or more mutual funds. If you have a portfolio of investments it will help you diversify across investment styles. In case if you have a large fund to invest then you can start off with a debt fund and for equity fund a SIP.

To conclude you cannot go on to invest in mutual fund if you are not KYC compliant. It is a must for financial transactions in India.

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