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Here Is Everything You Need To Know About Investing In Mutual Funds
In present times, it is just not enough for you to work hard for your financial requirements. You also need to make your money work for you. Creation of wealth is an important factor in ensuring your financial security and it is only possible to create your wealth by investing your money in suitable investment opportunities. There are many investment options that are available for you to choose from, but none can match the flexibility and potential of Mutual Funds. It is not without any reason that mutual funds have become one of the leading investment options for investors all over the world. But there is still a lot of confusion among new investors regarding mutual funds. The usual questions that are asked are: -
- How to choose mutual funds
- How to invest in mutual funds
- How to start a mutual fund
Let’s know more about mutual funds and how you can choose a mutual fund and start investing in it.
How to choose a mutual fund
The first and foremost step in starting your mutual fund journey is to choose a suitable mutual fund. With hundreds of options available in the market, it is important that you make an informed choice. There are some personal factors you need to consider while choosing a mutual fund.
- Your short-term and long-term financial goals.
- How much money can you spare for investment?
- What are your investment horizon and risk appetite?
When you have identified these factors, you can proceed ahead with choosing the mutual fund you want to invest in. Some of the major parameters you should pay heed to in respect to a mutual fund are as follows:
- Past performance of the mutual fund (3 years, 5 years, and 10 years)
- Experience of the fund manager and past performance
- Expense ratio levied on the transactions
- Size of the mutual fund is not as important as you may think
- Degree of diversification in the mutual fund
All these factors require careful deliberation and consideration from your side. Once you have worked on these, you should be able to choose a mutual fund that meets your investment philosophy.
How to invest in a mutual fund and start a mutual fund
Once you have identified the mutual fund(s) of your choice, the next step is to start investing. With the rapid progress of technology, it is now easier than ever for you to start investing in a mutual fund. You can either start investing through the offline mode or the online mode. There are some documents that you need to provide for starting investing:
- Address proof
- Identity proof
- Copy of cancelled cheque
- Passport size photographs
Once you have these documents ready you can opt for any channel available for you to start investing in mutual funds:
1. Offline channels
If you are not well-versed with Internet banking or are hesitant to use it, you can always get in touch with the fund house or a broker to help you out. You will need to fill the form and provide the above-mentioned documents. You can also seek their advice regarding the most suitable investment options for you. Every time you will need to invest more money or liquidate your investment, you need to get in touch with the representative for further guidance.
2. Online channels
This method is preferred by most investors as it is extremely convenient and flexible. You need to login to the website of the fund house or the broker. Follow the on-screen instructions to create a new account, verify your account using e-KYC. Once your credentials are verified, your account will go live, and you can start investing in a hassle-free manner. Many mutual funds and online brokers have their mobile app also to help you with your investments.
With the above information, you can easily start investing in mutual funds and grow your money for your present and future financial requirements.
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