How to Invest Mutual Fund for the Beginners in India

Mutual funds is known as one of the safest and best investment instrument to create wealth over a short term, medium term and long term period. Apart from working as a great instrument for wealth creation the mutual fund also offers tax benefit and helps to achieve the future financial goals.
The mutual funds investment is managed by the asset management company. The asset management company invests the investors’ money in debt, equity, stocks and other financial securities. We can call mutual fund as an investment tool where an individual’s money is invested in several money market instruments as mentioned above.
Anyone can start doing mutual fund investment; all you need to do is to open an account with the fund houses and your complete KYC. The best way to choose the most beneficial mutual fund scheme is to short list the funds and analyzes the long term and short term returns in order to understand the history of the fund performance. The investors should choose the fund option that is lined up according to your investment objective and risk profile. Make sure that your money is put in the right financial investment tool so that you have a good investment portfolio in order to avail profitable return over a long term short term and medium period of time.
With the burgeoning popularity of mutual fund as there is a wide range of investment options available in India, it is important to know that how to invest in mutual fund scheme. But, before knowing this, let’s check on the types of mutual fund available in the market for investment.

  1. Equity Mutual Fund– equity mutual funds are the safest and simple investment option in case you are wondering how to invest in mutual funds. Under this mutual fund scheme the money is invested in equity and equity related instruments like stock market and the return of investment depends upon the performance of the fund in the market. This fund option is best for long term investment as it provides more profitable return as compared to any other form of investment. However, equity fund investment best suits for those who have a higher risk appetite.  
  2. Debt Mutual Fund– To answer your question, how to invest in mutual fund. Debt funds are another option of investment offered by the mutual fund scheme. In debt mutual funds all the money is invested in debt instruments like fixed income investment, government bonds, etc. in order to ensure a fixed rate of return over a particular period of time. As compared to the equity mutual fund investment, the debt mutual fund is less volatile than equity mutual fund and offers less risk. This investment option is best suited for those individuals who want medium term investment return along with a low risk appetite.
  3. Balanced Mutual Fund- in balanced mutual fund the investment is made both in equity and debt market. Under this investment option a part of the fund is invested in equity market whereas the other half is invested in the debt market. Thus a balanced mutual fund guarantees a particular percentage of return on investment in a certain period of time.
  4. Open Ended Funds- the open ended funds provides free entry and exists. In open ended funds the investors can invest the money in these funds and can redeem the money at any time they want. Moreover, under the option of open ended fund the investors do not need to wait for any stipulated period of time.
  5. Close ended funds– This fund option comes with a lock in period of minimum 3 years. In close ended funds the money invested by the investors cannot be redeemed within the time frame of lock in period.
  6. ELSS (Equity Linked Saving Scheme)- ELSS is known as popular tax saving fund option as the investment made towards ELSS is exempted from tax deduction under section 80C of Income Tax Act. However, the equity linked saving scheme come with lock in period of 3 years.

Mutual fund investment is a great financial tool to achieve the ultimate financial goal of life. to avail the maximum return on your investment it is very important to keep a proper track of the market fund performance.

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