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How to invest in Mutual fund?


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Financial Education, Financial Inclusion, financial literacy,

Published in: Education
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How to invest in Mutual fund?

  1. 1. How To Invest in Mutual Fund?
  2. 2. The process Decide Your Investment Objectives Shortlist Funds Analyze & Compare Shortlisted Funds Don’t Pick Just One Change Tracks Whenever Necessary
  3. 3. Decide Your Investment Objectives Before you set out to invest money, it is important to take a step back and understand exactly why you are saving up. Your age and stage of life will also play an important role in deciding your investment objectives. Decide what you want your money to do for you and then proceed.
  4. 4. Shortlist Funds That Match Your Objectives The team that manages a mutual fund picks the assets into which investors’ money will be put based on clearly defined investment objectives. There are many kinds of mutual funds based on these investment objectives – rapid growth, retirement benefits, regular returns and so on.
  5. 5. The four fundamental objectives that guide most funds are: • Growth • Fixed Income • Balance of growth and income • Quick Turnover of Funds
  6. 6. Analyze & Compare Shortlisted Funds Look for the prospectus or quarterly reports of the shortlisted funds and analyze their performance. Also compare their performance against that of other funds with similar objectives and benchmark indices. Go for established funds with a proven track record.
  7. 7. Investing in a mutual fund is not like putting money in a bank account. There are certain fees that are attached to the investment you make that will be deducted by the Asset Management Company (AMC). These fees can sometimes add up to be quite significant and eat away into whatever returns you might make on your investments. These fees include entry load, exit load, annual expenses, management fees and so on.
  8. 8. Don’t Pick Just One Once you are done with your analysis, don’t jump onto the best fund as per your reckoning and park all your money with just one fund. Spread your risks by splitting your investment and putting in smaller sums in two or three different funds that figured on the top of your list after all the filtering and analysis.
  9. 9. Change Tracks Whenever Necessary Unlike fixed income instruments like bank FDs, mutual fund investments are subjected to the same market forces that affect equities, derivatives, and other forms of securities. However, the level of scrutiny need not be as close as you would have for individual stock purchases for the simple reason that a mutual fund is a professionally managed investment.
  10. 10. Qualified stock market analysts and fund managers who track every small move in the markets manage your funds as a full-time job. Having said that, you can’t simply wash your hands off your mutual fund investments once you buy them either. With fund performances moving in tandem with the stock market’s movements, it becomes imperative that you keep an eye on what is happening to your investment on at least a quarterly basis.
  11. 11. A financially aware and empowered India.