How to Invest in Mutual Funds?

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Mutual funds are one of the profitable investment schemes in the market today. They help an individual secure their future, plan for their retirement as well as keep their savings in good use.

Mutual funds are secure and profitable investment schemes that are managed by Asset Management Companies. The funds invested in a mutual fund are utilized in divergent investment channels such as debt, equity etc. Therefore, an individual benefits from the capital appreciation or dividends that are earned by these investments.

In India, mutual funds and related services are regulated by the Association of Mutual Funds in India (AMFI).

Before investing in a mutual fund, an individual needs to understand the associated costs in mutual fund investment. The fund value for a particular fund is calculated in the form of the Net Asset Value after every business day.

How to invest in a mutual fund for beginners

1. Asset Allocation
The initial step of mutual fund investment includes the division of your funds into different asset classes to help you make higher profits. Asset allocation is an important step in identifying the number of funds to invest in taking the individual’s risk profile into account.

2. Preparing a list of fund types
Once the asset location is performed, we reach the most critical stage of mutual investment. It is the shortlisting and finalizing of the mutual funds that are fit for an individual’s investments. Each mutual fund has an associated risk with it and it is important to consider the fund’s past performance, investment philosophy, shareholder reports, prospectuses, consistency and other factors before investing in a mutual fund.

3. Defining your investment goal or financial targets
Before investing in a mutual fund, an individual has to define their investment goals. He or she has to define the objective and purpose of investment, whether one is looking to save for their child’s education needs, child’s marriage, planning for retirement and so on.

4. Compare the mutual funds
There are a number of mutual funds in the market. Before investing in a mutual fund, an individual should take into account the above discussed points and then make a careful comparison of the different mutual funds. Each fund is different from the others depending on its past record, market performance etc. Analyze your risks, financial liabilities, profit ratio and similar criteria with the help of a professional distributor before investing in a fund.
The asset allocation performed in the initial stages of investment planning also helps an individual to identify the right mutual funds. Identifying and comparing the best funds in a particular asset class is the next important step. These funds may include equity, debt or hybrid.

5. Hiring a professional and reputed mutual fund distributor
Your asset needs to be channelized using the expertise and experience of a seasoned asset distributor. They coordinate with the fund managers who manage a mutual fund. Both the fund managers and the distributors play a critical role in tracking the performance of your funds.

6. Follow up and performance tracking
Tracking the performance of a mutual fund is critical towards reaping the maximum dividends from your investment. You can follow up on your diverse mutual fund investments and their future scope from time to time (in every 3 months, 6 months, annually etc). One can perform daily and regular tracking as well through our website.

7. Transparent and open communication with your distributor
Maintain a constant and open channel of communication with your distributor to improve your profits through the mutual funds distributed across different investment channels.

Plan for a secure future today! INVEST IN A MUTAL FUND
Invest in mutual funds today! Track the growth of your investments and build on your income at a regular pace and intervals.