Investing in mutual funds is a popular strategy for individuals looking to grow their wealth over the long term. With benefits such as diversification, professional management, and ease of investment, mutual funds present an attractive option.
However, the numerous choices and technical jargon can be overwhelming for beginners. Before choosing to invest in the fund, beginners should go through the list of mutual funds and select the scheme based on their risk and investment goals. The following guide will explain how to invest in mutual funds in detail.
Step-by-Step Guide to Investing in Mutual Funds
Below is a step-by-step guide to help you get started with investing in mutual funds :
1. Understand the Basics
Before diving into mutual fund investments, it’s crucial to grasp the fundamentals. This includes understanding the different types of mutual funds (equity funds, debt funds, hybrid funds, etc.), the associated risks and rewards, and the fees involved. A mutual fund app can simplify this process by providing educational resources and detailed information on each fund type.
2. Set Investment Goals
To choose the right mutual fund, consider your investment goals, risk tolerance, investment horizon, and financial objectives. Consider factors like retirement, education, or significant purchases. Personal finance apps like Tata Capital can help you choose the best mutual fund to match your investment requirements, including SIP, mutual funds, loans, insurance, and credit cards.
3. Choose a Mutual Fund
Once your investment goals are clear, it’s time to choose a mutual fund. Research different mutual funds, understand their investment objectives and analyze their past performance. Look for funds with consistent returns, low expense ratios, and a portfolio that aligns with your risk tolerance and financial goals. Most mutual fund apps provide detailed performance metrics and historical data to aid in your decision-making process.
4. Open a Mutual Fund Account
To invest in mutual funds, you need to open an account with a fund house or a broker. You’ll be required to submit documents such as your PAN card, ID proof, and address proof. Many mutual fund apps streamline this process, allowing you to open an account quickly and easily with minimal paperwork.
5. Invest in the Mutual Fund
Upon setting up an account, you can start investing through lump sum or Systematic Investment Plans (SIPs), which are beneficial for beginners due to disciplined investing and rupee cost averaging. A mutual fund app allows easy tracking of investments, SIP setup, and easy adjustments to the portfolio. Monitoring and portfolio adjustments are essential for successful investing.
6. Stay Informed
Keeping yourself informed about your investments is crucial. Regularly review your portfolio, stay updated with financial news, and read reports related to your investments. Consulting with a financial advisor can also provide valuable insights. A mutual fund app often features news updates, expert analyses, and notifications to help you stay on top of your investments.
Top Mutual Fund Apps for Beginners
Several mutual fund apps cater to both beginners and experienced investors. Here are some of the top mutual fund apps to consider:
1. Coin by Zerodha
Coin by Zerodha allows you to purchase mutual funds directly from asset management companies without commission fees. It features a user-friendly interface and offers a centralised demat account for managing your investments.
2. ET Money App
ET Money provides a range of financial products, including mutual funds, insurance, and SIPs. The app offers personalized investment recommendations and integrates with popular payment apps like GPay, PhonePe, and Paytm.
3. Paytm Money
Paytm Money offers direct mutual fund investments with higher returns through direct plans. Known for its digital payment services, the app makes it easy to invest in top-rated mutual funds with no hidden charges.
4. Groww
Groww is known for its minimalistic design and user-friendly interface. It offers over 5000 mutual fund schemes along with additional investment options like Digital Gold, US Stocks, and Fixed Deposits.
5. Angel One
Angel One provides access to over 4000 mutual fund schemes with no hidden charges. The app includes advanced tools and calculators to help investors create personalized portfolios.
6. Tata Capital Mutual Fund
Tata Mutual Fund offers top-performing mutual fund schemes managed by Tata Asset Management Ltd. The company provides diverse investment options based on risk appetite, financial objectives, and income, built on the principles of performance, service, and trust.
Conclusion
Investing in mutual funds can significantly enhance your wealth over the long term. By understanding the basics, setting investment goals, choosing the right mutual fund, opening an account, investing, and staying informed, you can make well-informed investment decisions.
Leveraging mutual fund apps simplifies this process, offering convenience and valuable resources to help you build a strong, diversified investment portfolio.Â
