Published: 2021-11-03
Views: 233
Author: Saalim
Published in: Business

Investing in Mutual Fund is one of the ways that you can start making money with your investment, you should also note that there are several ways to get started with the Mutual Fund scheme.

Now, to quickly get started, you can easily launch your investing in Mutual Funds by submitting a fully completed application form along with a cheque or bank draft to a branch office or designated Investor Service Centres (ISC) of Mutual Funds or Registrar & Transfer Agents of the respective Mutual Funds.

If you can’t make it to the designated investor centers (ISC), then you can also invest online by visiting the websites of the respective Mutual Funds.

Another way that you can also get registered is through the assistance of a financial intermediary, such as an AMFI-registered Mutual Fund Distributor, OR choose to invest directly, which means you will be investing without involving or routing the investment through any distributor.

This is why it is important to understand that a Mutual Fund Distributor is an individual or a non-individual entity, like a bank, brokering house as well as online distribution channel provider.

What Are Mutual Funds?

Most times, mutual funds are usually led by a team of investment experts who chooses the investments to add to the mutual fund based on the fund's specific objective.

How to easily use the mutual fund calculator

• Enter a starting investment amount.
• Next, enter an annual contribution if you intend to make new investments on a regular basis (as experts recommend). Although, most mutual funds have initial investment minimums. But it is often waived by the brokers if you make monthly deposits.
• Include the number of years you intend to remain invested in the fund. The greater the potential returns, the longer the time horizon.
• Then input the mutual fund's estimated annual return.
• Now you can add the annual fees, which are known as the mutual fund's expense ratio.

Lower fees mean that more of your money will stay invested for long-term growth.

How to choose the Best Index Funds?

When you decide to invest in Index Funds, you should only focus on three aspects of the funds, which are listed below.

• Expense Ratio- Lowering the Expense ratio is preferable to me.
• Tracking Error- It is nothing more than how far the fund has deviated from the Index against which it is benchmarked in terms of returns. Lower tracking error equals better fund performance.
• AUM- The greater the AUM, the greater the advantage for the fund manager in managing liquidity issues.

How much to invest?

When you have set your goals as well as the target amounts you intend to invest, as well as completed the asset allocations. Then you need to also set the expected return from each asset class; after that, the final step is to determine the amount to invest each month.

There are two approaches.

One is a consistent monthly investment over the course of the goal period.

The second step is to increase a fixed percentage each year until the goal period is reached.

What do you need to start investing in mutual funds?

The first step to kick-start your investment is to ensure that you have become "KYC compliant."

The process involves the submission of your address proof, photographs, date of birth proof, and, most importantly as well as your PAN card.

You have the option to choose whether to invest in mutual funds directly through brokers or through the mutual fund house.

As previously stated, you can choose between an equity mutual fund and a debt mutual fund.

Where to Buy Mutual Funds Online

Although, in today’s digital world, there are numerous investment websites and trading platforms available. You have access to three basic ways to buy mutual funds online.

#1. Investment Companies

One of the best ways to start off with your mutual fund investment is to start with investment companies. The investment companies will help you to manage your investment.

Across the list of investment companies, you will find different mutual fund firms ranging from publicly traded behemoths such as T. Rowe Price to private boutiques like American Century or Dodge & Cox.

Note that the different firms offer at least a few different funds. This fund ranges from passive index funds, actively managed equity funds as well as high-yield bond funds.

#2. Brokerages

You can also open an online brokerage account. Well, this might be the most expensive course.

The reason for the cost is that these accounts usually charge a transaction fee/commission for each trade, as well as other account setup or maintenance fees.

They will, however, offer the most diverse universe of mutual funds from which to choose.

#3. Investment-1Cum-Financial Services Companies

In case you don’t want to be limited to a single fund company, some investment firms will let you buy and sell mutual funds and exchange-traded funds (ETFs) from other firms using an in-house account.

A typical example of this type of company is The Vanguard Group and Fidelity Investments which are mutual fund managers that have evolved into full-service financial services firms, supplementing their own funds with those of competitors.