Skip to main content

5 important questions answered for a first-time mutual funds investor

How much should I invest?

Identify your goals first; this will help you decide the amount you need to invest to achieve each goal.

Should I invest in equity or debt schemes?

It primarily depends on your investment objective, investment horizon and risk profile. If you are investing to achieve a short-term goal that needs to be achieved in a couple of years, debt schemes are ideal for you as these schemes are mostly risk proof.
 
However, if you have a long-term financial goal that needs to be met after five years or so, you can invest in equity mutual fund schemes as these have the potential to offer superior returns than other asset classes.

What is the minimum amount required to start investing in mutual funds?

It’s important to start investing and the beauty of mutual funds is that you can start with as low as Rs 100 per month. The mantra is to “start and stay invested for long term”.

If I start with Rs 100 per month, can I keep adding as my income increases?

Yes, you can. In a mutual fund scheme, you can make additional purchases in the same fund.

Is Systematic Investment Plan the only way or I can invest in lumpsum too?

It depends on the amount of money you have to invest. A lumpsum investment gives more time to investment and results in higher returns as the power of compounding (basically earning interest on interest) increases with time.
 
On the other hand, an SIP (the pre-determined amount invested at a regular interval) gives you the benefit of Rupee Cost Averaging (RCA), which basically balances out the volatility of the market in the long term. Since a fixed amount is invested at regular intervals, you get to purchase more units when the prices are lower and vice versa.

Important piece of advice!

Since you are new to investing in mutual funds, you must invest with the help of a mutual fund advisor for smooth onboarding, expert opinion and careful scheme selection.

Comments

Post a Comment

Popular posts from this blog

What are hybrid mutual funds and how are they taxed?

What are hybrid mutual funds and how are they taxed? Every investor is different. There are some who like taking risks and enjoy the potential of high returns. On the other hand, there are some who are very conservative in terms of taking risks. They don’t mind the low returns as long as they are assured of capital security. Then there are those who are in the middle of the risk spectrum. They are not too aggressive neither too conservative. They look for moderate risks with moderate returns. To suit the investment preference of these different types of investors, mutual funds come in different variants. One such variant is the hybrid mutual fund which is suitable for moderate investors who lie in the middle of the risk spectrum. Let’s understand the concept of hybrid mutual funds and their tax implications – What are hybrid mutual funds? Hybrid funds are mutual funds which invest in both equity as well as debt instruments. The return potential of equity investment is adde...
Post a Comment
Read more

Have you saved enough for your child’s future financial needs?

Mutual Funds Plan for children is the answer to secure your kid’s financial future Every parent aspires to offer the best to their children – sound education, a decent lifestyle and most importantly, adequate financial security for them to pursue their dreams. But in order to fulfil these desires, it is necessary that planning and regular investments are done early on. And what better than Mutual Funds to achieve these objectives? What are Mutual Funds Plans for children? Mutual Funds Plans for children are the mutual fund schemes specially designed keeping in the mind the long term financial needs of a child. How do Mutual Funds Plans for children Work? They invest proportionately in both equity and debt instruments to maintain a balance between growth and regular income, depending on the scheme. These are mostly hybrid funds that seeks to generate income by investing in debt, money market instruments and equity and equity related securities. They are ideal for investors ...
Post a Comment
Read more

Tax free benefits make whole life ULIPs the perfect retirement plan

When your clients look for investment returns and insurance coverage, the first product which comes to your mind is a Unit Linked Insurance plan (ULIP). A ULIP is an insurance plan which provides a unique combination of market-linked returns as well as life insurance coverage. Moreover, the new age ULIPs which are now available in the market promise additional benefits, both in terms of coverage as well as benefits offered. Modern-day ULIPs have, in fact, undergone a sea of change compared to traditional ULIPs which were available about a decade or more back. Some of the notable changes include the following – The charges under new age ULIPs have reduced drastically. While, earlier, the premium allocation charge and other charges associated with the policy rode up to 40% or more, current ULIPs have charges lower than 5%. With the reduced charges the revamped ULIPs offer higher allocated premiums which, in turn, provide better returns to customers The coverage tenure under many ...
Post a Comment
Read more