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Getting Started With Mutual Fund Investments

By Expert Author: Aashna Batra

Where do Mutual Funds Invest:

Broadly, Mutual Funds investments are made into three types of asset classes:

Stocks: Stocks represent ownership or equity in a company, which are also termed as shares.

Bonds: Investment made in debt from companies, financial institutions or government agencies

Money Market Instruments: These constitute short-term debt instruments such as treasury bills, certificate of deposits and inter-bank call money.


Mutual Fund Investment Guide:

Invest through SIP: Investing through SIP every month is an ideal way of investing in mutual funds. Every small amount invested every month holds the potential of generating a substantial amount over a period of time.

For example : investing in ₹ 5,000 per month through SIP in equity fund with an annualized returns of 12% can yield ₹ 25 lakhs in 15 years.

Invest based on risk appetite: High-risk appetite investors are concentrated towards investing in equity funds and moderate risk appetite investors would like to invest in hybrid funds(Equity+debt combination) and low-risk appetite investors would like to consider investing more in debt related funds. In short, investment made in accordance to an individual's risk style would generate higher returns.

Invest in various categories of funds: Large cap, mid-cap, and small-cap funds perform in a different manner over a particular period in various market scenarios. Hence, investing in different categories of such funds would help investors to gain maximum returns.

Invest in sectors that are likely to outperform: High-risk investors who are considering to take risks would like to invest in high-risk funds such as sector funds. Such investors can undertake sectors that have the probability to outperform in the near future and invest in such funds. For instance, investing in infrastructure funds or banking funds would be an ideal bet for a short-term to medium term of 3 to 5 years.

Invest in funds dependent on one's financial goal: Lack of awareness amongst investors about

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