Whether you are an experienced investor or just beginning your investment journey, mutual funds can be one of the investment avenues to invest your hard-earned money. Some of the key features of mutual funds are discussed here. These will also help you understand the importance of mutual funds to make an informed choice.
How to Invest in Mutual funds
You can invest through an authorised distributor of the mutual fund of your choice. You can also visit the fund house’s office and purchase directly from them.
However, investing in mutual funds online is the easiest way. The process is fast and hassle-free. You can also compare different mutual fund types and features before investing. Following are the steps involved in investing in mutual funds online.
Visit the official website of the mutual fund house. Compare various mutual fund products to see which one best suits your needs.
Select the mutual fund you want to invest in.(Know How to Choose a Mutual Fund?)
Enter scheme details like scheme options (Growth and IDCW- Income Distribution cum Capital Withdrawal) and investment types (Lump sum or SIP-Systematic Investment Plan).
Enter your PAN and date of birth. Ensure that you’re KYC compliant before proceeding further.
Enter additional personal information.
Enter investment details like investment amount, frequency of payment, etc.
Make the payment online to purchase the plan.
Also Read -
How to Invest in Mutual Funds?
8 Features of Investing in Mutual Funds
-
Liquidity
You can easily redeem the units of your mutual funds to meet any kind of financial emergency. Based on the type of scheme, the redemption amount is usually credited to your bank account within 3-4 business days from the date of redemption. In the case of liquid funds, the amount is credited on the next business day . However, do note you may be charged an exit load if you redeem your equity or debt funds before the specified period in the SID (Scheme Information Document) of the mutual fund. The exit load is charged as a percentage of the
NAV (Net Asset Value) of the mutual fund at the time of redemption.
Also Read - What is Liquidity?
-
Professional Management
Mutual funds are managed by professional fund managers who closely watch the markets and make constant investment decisions based on the fund's stated objective. Therefore, you don't have to worry about researching and individual stock picking once you invest in mutual funds.
-
Portfolio Diversification
One of the key features of investing in mutual funds is that you get a diversified portfolio containing different types of equities and other options. Based on the scheme's objective, a mutual fund can have proportionate exposure to various financial instruments like equities, debts, or other asset classes such as gold, real estate, etc.
Therefore, the risk is spread out over different asset classes. So, even if one asset class performs poorly in adverse market conditions, the other classes can still aim to balance your investment portfolio balance.
Also Read -
What is Debt Fund?
-
Income Tax Benefits
Both equity and debt funds carry their own unique tax benefits. For instance, while debt fund investors benefit from indexation on long-term capital gains, equity funds allow you to earn exempted returns up to Rs 100,000 in a financial year as long as you stay invested for 12 months or more.
Apart from this, there are ELSS (Equity Linked Savings Scheme) funds, which allow you to invest up to Rs 1,50,000 in a year and deduce the same from your taxable income.
Also learn about :
What is ELSS Fund?
-
Investment Flexibility
One of the key features of mutual funds is the flexibility they offer. You can either invest a large lump sum amount in the beginning or regularly invest small amounts (as low as Rs 500 per month) in the form of a SIP (Systematic Investment Plan).
Click Here to know What is SIP?
-
Low Cost
Mutual funds charge a small amount known as the expense ratio from investors. The expense ratio is charged to cover operating expenses such as management, administration, etc., and other charges.
-
Properly Regulated
The Securities and Exchange Board of India (SEBI) regulates the mutual fund market. Mutual funds have to strictly comply with SEBI (Mutual Funds) Regulations, 1996, to ensure transparency and protection of investors’ wealth.
-
Ease of Purchasing
While you can invest easily through offline modes, online buying and selling of mutual funds have made the lives of investors much easier. You don’t have to visit a mutual fund house’s office. Just visit the official website of the asset management company. Compare various mutual fund products offered by the fund house and invest online. The entire process is easy, convenient, and fast.
What Factors Should I Consider Before Investing in Mutual Funds?
Now that you’re aware of the features of mutual funds, it’s vital to consider certain factors before choosing to invest in them.
Risk Appetite
Do you mind taking a higher risk for a potentially higher return, or do you worry too much about the daily market volatility? For instance, small-cap funds, carrying high risk, can be opted by aggressive investors. On the other hand, debt funds can have lower risk and can be opted by conservative investors.
Investment Tenure
The longer the investment tenure, the more potential for long-term returns. However, you might want to invest to meet short-term goals like purchasing a car, marriage, etc. Therefore, choose your investment tenure wisely and invest in suitable funds accordingly.
Fund’s Performance
Check out the mutual fund’s performance history, especially the past five years.
Just saving prudently from your income source will not get you closer to your goals. You need to invest your savings wisely to turn those savings into long-term wealth that can help to beat inflation and help you achieve your long-term goals. Invest in the mutual fund of your choice
Also read about : Types of Mutual Funds
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Home Loans
Personal Loans
SME Loans
Business Loans - Udyog Plus 
Loan Against Securites
Loan Against Property
Mutual Fund
Stock and Securities
Wealth
Portfolio Management Services
Pension Funds
Life Insurance
Health Insurance
Wellness Solutions
Pay Bills
Pay for anything
Pay Anyone
Pay on Call
Payment Lounge
Credit Cards
1800-270-7000
AppStore
Playstore
On 11/7/2022
On 10/11/2023