How To Invest In Mutual Funds In 2023: Best Mutual Funds To Invest; For first-time investors, investing in mutual funds may appear difficult since it may occasionally be confusing. The first step in the financial journey is to learn how mutual fund investments operate.
When compared to most other investing alternatives, SIP allows you to deposit as little as Rs 500 in a mutual fund to start investing. You can invest in mutual funds that have financial goals and risk tolerance that match your risk tolerance. There are several mutual funds accessible.
How do Mutual Funds work
When an asset management firm (AMC) aggregates contributions from different individuals and institutional investors that have similar investing goals, a mutual fund is created. In accordance with the investment goals of the fund, a fund manager professionally manages the pooled investment by strategically purchasing assets to produce the highest returns for the participants.
Professionals having a proven track record of managing investments and in-depth market knowledge are fund managers. The yearly cost paid by the fund houses to administer the mutual fund is known as the expense ratio.
Things to Consider as a First Time Investor
Fix an investment goal
Establishing your financial objectives, spending limit, and time horizon plays a big part in your investing decisions. This will assist you in determining how much you may set away for investing, and you must also invest in accordance with your risk tolerance. The finest investments are always made with a goal in mind.
Also Read :- 10 American Mutual Funds In Which Indians Can Also Invest: Best Mutual Funds To Invest In 2023
Choose the right fund type
To choose the appropriate category, one must do more than simply read about the various mutual fund kinds. For novice investors, experts frequently suggest a balanced or debt fund since it carries few risks while providing regular returns.
Shortlist and choose one mutual fund
To choose the best investment from the many mutual fund plans offered in each category, you must evaluate and compare them. Investors shouldn’t disregard aspects like the portfolio components, assets under management, expense ratio, and qualifications of the fund manager.
Keep KYC documents updated
If the Know Your Customer (KYC) procedure has not been completed, you are unable to invest in mutual funds. To determine the source of funds and avoid money laundering, KYC is a regulatory requirement for the majority of financial transactions in India. You must have a PAN card and a valid address evidence in order to become KYC-compliant. There, ClearTax supports you.
Open a Net Banking Account
You must enable online banking on your bank account in order to invest in mutual funds. While debit cards and checks are other methods of payment accepted by mutual funds, using net banking is a simpler, faster, and more secure way to make investments.
Seek advice from a financial advisor
It can be difficult and intimidating to invest in a mutual fund from beginning to end. There are thousands of mutual funds to select from, therefore it is also necessary to keep an eye on their performance. If selecting the best mutual funds seems like a mammoth effort to you, seek the assistance of a mutual fund specialist or distributor.
Benefits of Investing in Mutual Funds
- Mutual funds are regulated by the Securities and Exchange Board of India (SEBI). Accordingly, as per SEBI Regulations, 1966, strict guidelines are laid to ensure transparency with an appropriate risk mitigation framework, keeping investor protection and fair valuation standards in mind.
- A mutual fund is flexible in nature. This signifies that you can put in a considerable amount to invest in a mutual fund. You can invest as per your need and financial flow. For instance, you can opt for SIP or Systematic Investment Plan if you are a salaried individual. With the help of SIP, a fixed amount is invested periodically (monthly, for example) depending on your budget and convenience.
- Mutual funds are easily accessible and are quite easy to buy from anywhere in the world. Multiple asset management companies (AMC) offer funds and distribute them through different channels like agents, brokerage firms, online platforms, and many more.
- Mutual funds are easily accessible and are quite easy to buy from anywhere in the world. Multiple asset management companies (AMC) offer funds and distribute them through different channels like agents, brokerage firms, online platforms, and many more.
- The lock-in period of tax-saving mutual funds like ELSS is only 3 years. This is lower than other tax-saving options like PPF, FD, ULIPs, etc.
- It allows easy redemption depending upon the type of scheme. For instance, for overnight and liquid funds, investors can readily redeem units on any business day to meet their financial needs.
- Open ended schemes are very flexible as they are open to subscription and withdrawal on any given business day.
How to Invest in Mutual Funds
You can invest in mutual funds in a paperless and hassle-free manner at ClearTax. Follow these simple steps to start your investment journey right away:
- Step 1: Log on to cleartax.in and create an investment account
- Step 2: Enter all the requested details
- Step 3: Get your e-KYC done, the whole process can be completed in 5 minutes
- Step 4:Â Invest in the right mutual fund
Best Mutual Funds To Invest
Frequently Asked Questions
How does a beginner in mutual funds?
According to experts, 20% of your monthly earnings should ideally be invested in mutual funds. Additionally, you may pick and invest in a mutual fund online with only a few clicks thanks to the abundance of internet platforms available nowadays.
Can I buy mutual funds myself?
True, anyone may use internet investment platforms to acquire mutual funds on their own. You may also purchase them through a middleman or broker, though.
What are the 3 types of mutual funds?
The 3 types of mutual fund include equity, debt, and money market funds. However, a mutual fund can be classified into various other sub-categories.
How much will I get if I invest Rs.2,000 in a mutual fund SIP?
Using the method below, you can quickly determine the return if you invest Rs. 2,000 per month for 24 months via the SIP route in a mutual fund scheme with an expected rate of return of 8%:
Future Value = P [ (1+i)^n-1 ] * (1+i)/i.
What are the three colour codes used for mutual funds?
All mutual funds must be color-coded in accordance with SEBI regulations so that investors may select funds depending on their risk tolerance. Yellow signifies that the fund is somewhat hazardous, while brown indicates that the fund is very dangerous. Blue indicates low danger.
What do you want to avoid when investing in mutual funds?
Some of the common mistakes to avoid are:
- Investment without financial goalsBest Mutual Funds To InvestBest Mutual Funds To Invest
- Not focusing on the risk profile
- Investing without budgetBest Mutual Funds To InvestBest Mutual Funds To Invest
- Selling investments in a bear marketBest Mutual Funds To InvestBest Mutual Funds To Invest
- Investing in too many funds
- Investing with a short-term approach
- Not considering debt funds.
How to invest in International Mutual Funds?
You may invest in International Mutual Funds directly through an AMC in India. It is an Indian mutual fund scheme that invests in stocks of foreign companies. However, you may consider the fund of funds schemes that invest in foreign mutual funds or whose portfolio mimics a stock market index such as the Nasdaq 100 or S&P 500.Best Mutual Funds To InvestBest Mutual Funds To Invest
You can invest in International Mutual Funds through an online platform such as cleartax invest.
- Log on to Cleartax investBest Mutual Funds To InvestBest Mutual Funds To Invest
- You must opt for the mutual fund house from the list of fund houses
- Select the International Mutual Fund under the category ‘Equity’ based on your investment objectives and risk tolerance and click on Invest now
- Select the amount you plan to invest in the International mutual fund and the mode as One Time or SIP.
