If you are a beginner and just beginning to start on mutual funds, here is what you need to know about mutual fund schemes. They have become one of the most popular with individual investors because of the benefits they provide. Some important factors that drive investors to mutual funds are as follows
- You can start at any amount. (For as low as 100 INR)
- Can diversify across multiple stocks and other instruments such as debt, gold etc.
- Begin SIP (automated systematic investment plans) every month.
- Use online portals such as Tradeplus to invest in mutual funds at the comfort of your homes
Here are some key pointers that you must keep in mind before you invest in mutual funds and best mutual funds to invest in for the long term.
- Begin with a goal in mind: The most important thing in mutual fund investing is having a goal in mind. Unless you know where you want to reach and what you want to achieve, it does not matter how fast you proceed. Once you identify your goal, then you need to plan. A goal becomes a financial goal only when you add a monetary value to it. Once you arrive at that goal, then you need to evaluate how much risk you can take. If you have long-term goals, you can take more risk and hence equity funds become a good choice. For medium goals, you can limit the risk you take and opt for debt or balanced funds. For short term goals, you can opt for liquid funds as your best choice.
- Adopt a systematic approach to mutual fund investments: Allocation of a fixed sum of investment each month can benefit you in the long run and also get the benefit of rupee cost averaging or RCA. SIP investments also help as it works in your favour of reducing the cost of holding and enhancing your returns. When you arrive at your goal and give a monetary value to it, it is one of the best ways to achieve your goal since it is properly tagged. It helps you to maintain discipline in achieving your goals and it can synchronize a regular income flow too so you do not feel the pressure of allocating money.
- Go the ELSS route, thus making an entry into mutual funds: A lot of investors are quite sceptical about equities as an asset class as they believe it carries risk. While it is true that equities come with risk, it can even out at a longer time frame. The biggest risk is not taking any risk of any sort. The way they underperform and fail to create value out of your money. ELSS is also a tax-saving fund which invests inequities. Since ELSS can be locked for 3 years, the investors will not succeed in the temptation of booking profits in a short period. Thus it enhances your returns due to tax benefits and also gives you a minimum of 3 years to experience the benefits of equity investing.
- Stick to tried and tested names: Good funds are good optimizers. They either try to maximize the returns for a given level of risk or try to minimize the risk for a given level of return. Most of the tried and tested names have delivered results over time and have a reputation to protect. You will not find them compromising on any brand so easily. That should suit you too as you are setting out exploring this route.
Classroom : Mutual Funds basics for beginners
We hope the above tips help you in your journey into Mutual Funds. With Tradeplus you get into a whole world of investing and by investing in Mutual funds in Direct mode you pay absolutely no charges to anyone on your investment. This means that your investment works only for you 100%. No brokerage, No commissions to MF companies– save up to 1% per year on charges. Invest conveniently using our INFINI MF mobile APP. If you have an account with us you can Sign in now and start saving. If you don’t have an account with us Click here to open an account. It only takes 15 minutes to open an account using your Aadhaar card.