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  • Category: Mutual Funds

    How to start investing in Mutual Funds?

    Want to invest in mutual funds? Searching for financial advice? Check out this page for financial guidance to your queries.

    I am a student and I earn online. I have bank accounts in SBI and HDFC. I would like to know the best way to invest in mutual funds online?
    What are the best mutual funds available where I can invest easily?
    Do I need to go to bank to get it started?
    Awaiting advice.
  • Answers

    6 Answers found.
  • When it comes to mutual fund investment you have the following options.

    1. Equity Fund
    2. Debt Fund
    3. Balanced funds
    4. Index fund
    5. Income fund

    There are also mix of the funds in the above list. So it all comes down to how you choose to allocate your funds.

    Equity funds are worth investing up-to your age of 50. After that most of your allocation should be in debt, balanced and income funds. Equity is very risky and you should only choose it for long term horizon of 5 years and more. In case of debt, the returns are low but the risk is also low. And you can compare debt fund with RD, FD and PPF returns. In case of balanced funds, your risk is low and returns are better than the debt funds with risk less than equity funds. Index funds are also good in terms of market diversification. As that fund is meant for the long term. As for the income fund you'd find that this fund requires a bit more risk compared to the equity.

    You can open the mutual fund SIP by directly going to the fund house website. And that method would be direct investment. And your returns are not affected by the trail commision. And this should be the way to do the investment in general. However if you are totally clueless of how to invest into mutual fund then fundsindia, sharekhan and other brokers can guide you for that. Do note that as far as good fund selection is concerned you have to invest wisely. And that part you have to find out how to do it effectively.

  • You should opt for mutual family fund. In this case you will be saving lots of money on transaction fees. You can do all buying and selling of shares without paying any extra fees on your shares.

    Types of mutual funds:-
    Based on maturity period of the amount you invested, mutual funds can be categorized into different types.
    1) Open ended- Shares can be bought or sold at any time without any maturity.
    2) Closed ended- This scheme has a maturity period.
    3) Interval- It provides benefits of both open and closed ended schemes to the investor.

    Open ended schemes:-
    1) Debt/Income scheme,
    2) Liquid scheme,
    3) Equity scheme,
    - Index scheme,
    - Sectoral scheme,
    - Tax saving
    4) Balanced scheme

    Closed ended schemes:-
    1) Capital protection,
    2) Fixed maturity plans

    You need not go to banks to open a mutual fund. You can do it online but you should first check whether you have a bank account as different mutual funds partner with different banks.

  • You are a student and you earn on line. I assume that your earnings are not very hefty. Under such condition you need to have safe investment ways. No doubt mutual funds provide a good option. You may invest through SIP. Systematic investment plans (SIPs) let you deposit your contributions monthly, fortnightly and even weekly. They have their own minimum amount restrictions. On a particular date in every contribution period a fixed sum of money is debited from your account and it is invested for the SIP. Since the amount is fixed such funds minimize risk against market fluctuations. if prices in a particular period are high less number of units are bought with your money and if less then you get more units. With an on line demat account like icicidirect you can maintain balance in your savings bank account and the amount gets deducted and invested for your mutual fund account automatically. The bank account and the demat account are internally connected and hence there is no problem for drawing money from and to the savings account. However, one must calculate as to which bank or service provides efficient and cheap buying and selling as well as entry and exit load of funds. A personal disclosure is that I have earlier earned good profit through Franklin and Templeton's Small Companies Growth fund and am currently invested in SBI Bluechip mutual fund through SIP.

  • As a first step you have to understand what is mutual fund and how does it function. There are basically four types of mutual funds, viz., Equity fund, Debt fund, Hybrid fund and Liquid fund. You may get some idea from the articles, the links of which are given below:-
    (i) Different Types of Equity Mutual Funds
    (ii) Top five tips to pick good mutual funds
    There are many such resources which can help you to get initial knowledge. Please check the following two websites for this purpose:-

    Thereafter, you have to chose suitable schemes based upon your investment aim , time horizon and risk-taking ability.

    After chosing suitable schemes, you have to initially visit the Fund House for registration and for registering for online transaction option. For this purpose, you PAN card, AADHAR card and bank details are necessary. This may take around 15 days.

    After completing these necessities, you can start investing in your chosen scheme(s). As you are a beginner, I would advise you to start investing in an equity-oriented hybrid scheme through SIP at the initial stage.

    Beware! I question everything and everybody.

  • SIP is the systematic investment plan and the same can be operated with even a small denomination - as little as Re 500/ - pm for a fixed period of time. There are different modes of its operation such as equity fund, debt fund, index fund etc. Again some funds are the balanced funds consisting of both equity and balanced funds. You may start earning a lucrative amount on selection of a right portfolio.
    If you are a regular reader of Economic - times published by Times of India group and you can have sound perceptions of the existing marketing instruments. Otherwise there are competent financial - consultants who offer their advices on the basis of their commission and for your sound investment, they can be referred to for better returns.
    HDFC debt equity - fund, ICICI prudent dynamic fund and SBI Blue - chips funds are ideal. You may have some portfolio of Index - funds being operated by some financial - institutions for attractive returns since these funds are protected by the rate of inflation and as such you may expect a rich dividend over a specified time - period.

  • One of the best way to invest in Mutual Fund is to start SIP in those funds which are proven since many years, at-least 5 years. I am doing SIP of well known funds. This helps you to save more money as well as good return. There is no need to have any prerequisites. You just need to open mutual fund account with whom you want to start your investment.

    Dr. Paresh B. Gujarati.
    Mechanical Engineer.
    'I'mprovement always begins with 'I'.

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