Start mutual funds Investment with Choice

There are many tips and suggestions on how to invest in mutual funds. An educated decision requires a deep understanding of the complex mutual fund segment. Unfortunately, most of the information on mutual funds investment is likely outdated or too glossed over. This article will provide details regarding the types of mutual funds in the market and the most useful tips to help you invest in mutual funds easily and profitably. You will also find a lot of relevant information and answers to most of your queries towards the end in the form of frequently asked questions.

What is Mutual Fund Investment?

You may wonder what mutual funds are and how they work? Mutual funds are investment schemes that collect money from investors. A mutual fund manager would then invest that money in assets like shares, bonds, and certificates of deposits. Depending on an investor's goal, the investments can be for the short, medium, or long term. There is also a relevant risk factor attached to each scheme, which investors can choose based on their needs.

When you invest in a mutual fund, you are essentially pooling your money with other investors with similar goals. You can then invest in various securities that align with your portfolio objectives. For example, if you are looking for growth but want to avoid taking unnecessary risks, you can choose a fund that invests in high-growth companies but also has a lower risk profile.

Benefits of Investing in Mutual Funds

Here are the various benefits of mutual funds.

• Risk diversification

  Risk diversification is one of the benefits of investing in mutual funds. When you invest in a mutual fund, you buy shares in a basket of stocks spread across different sectors and industries. Your investments do not remain tied to any one company or sector. If one company or sector does poorly, it won't drag the rest down with it

• Professional management

  Mutual funds are professionally managed investments. A team of experts is in charge of your money and is responsible for ensuring it gets invested wisely. They have access to all kinds of data you don't—like market trends and sector analysis—and they use this information to decide where your money goes.

  This is especially useful if you don't have time or expertise to manage your own portfolio. Alternatively, you may not have the knowledge or experience necessary to decide which stocks or bonds are best for your needs.

• Convenience

  If you have limited money to invest, it can be tough to find an investment that will give you the desired returns and allow you to build more wealth over time. While some investments require large upfront deposits, others require frequent contributions. It can be difficult for someone who wants to ensure they stay within their budget and save money for retirement or other financial goals.

• Regulated

  Mutual funds get regulated by the Securities and Exchange Board of India (SEBI), which makes them safe to invest in. You are not just putting your money into a financial vehicle that can disappear overnight. It is subject to oversight by the government and its agencies. You do not have to worry about losing your investment or getting scammed. You will also get tax benefits if you invest in mutual funds through an SIP (Systematic Investment Plan).

Types of Mutual Funds

Here are the various types of mutual funds.

• Debt funds

• Equity funds

• Index funds

• Balanced funds

• Money market funds

• Income funds

• Fund of funds

• Speciality funds

There are several other types of mutual funds that we can classify based on investment objective, structure, asset class, risk, and speciality. Let’s look at them.

Mutual funds based on investment objectives:

• Income Funds

• Liquid Funds

• Capital Protection Funds

• Fixed Maturity Funds

• Growth Funds

• Tax-Saving Funds (ELSS)

• Pension Funds

Mutual funds based on structure:

• Open-Ended Funds

• Close-Ended Funds

• Interval Funds

Mutual funds based on structure:

• Equity Funds

• Debt Funds

• Money Market Funds

• Balanced or Hybrid Funds

Mutual funds based on risk:

• Low Risk

• Medium Risk

• High Risk

Mutual funds based on speciality:

• Index Funds

• Fund Of Funds

• Sector Funds

• Emerging Market Funds

• Commodity-focused Stock Funds

• Market Neutral Funds

• International Funds

• Global Funds

• Asset Allocation Funds

• Gilt Funds

• Real Estate Funds

• Inverse/Leveraged Funds

• Exchange-traded Funds

SIP Vs. Lump Sum Mutual Fund

The primary distinction between SIP vs. lumpsum mutual funds is how you invest your cash. In a SIP, you make regular investments over time that you can calculate with the help of a SIP calculator. You buy units of your selected mutual fund regularly, and the money gets invested there. In contrast, when you invest in a lump sum mutual fund, you put the entire amount at once.

Best Mutual Funds to Invest

The best mutual funds to invest your money in are one that suits your investment needs, risk level, and time horizon. For example, if you are young, have a long time horizon, and are looking for growth potential, you might want to consider a stock market index fund. If you are older and more conservative, you may consider investing in fixed-income investments that provide steady returns over the long term.

Here are some of the leading mutual funds you can consider.

• UTI Flexi Cap Fund

• Axis Midcap Fund

• Axis Small Cap Fund

• SBI Small Cap Fund

• Axis Bluechip Fund

• Mirae Asset Large Cap Fund

• Parag Parikh Long Term Equity Fund

• Kotak Emerging Equity Fund

How to Invest in Mutual Funds Online

Here are some tips on how to invest in mutual funds online.

• Understand your risk and tolerance levels, which is about risk profiling for your hard-earned money.

• Search and identify asset classes, which can be a mix of debt and equity products that balances the risk factor.

• Select funds for each asset class by analysing their performance and your investment goals.

• Look for mutual fund schemes and apply for them online.

• Conduct regular follow-ups and diversify your portfolio to get the best returns.

Best App for Mutual Fund Investment

The best app for mutual fund investment is the one that makes it easy to access information, find the funds you are looking for, and open accounts. They should also be able to help you track your investments and make buying decisions based on your goals. Seamless money transfer is another consideration to be wary of.

Why Invest in Mutual Funds with Choice?

At Choice, we believe that investing in a mutual fund should be simple. We also have an extensive network of financial professionals who can help you decide the best way to invest in mutual funds. We know every investor has different needs and goals, which is why we offer an array of investment options.