When the talk is about investments and savings, what comes to mind first? Maybe the answer is real estate, gold, or bank fixed deposits. Right? Previously, most Indians relied on them. But the scenario has evolved far from it. Over the last few decades, mutual funds have been considered a great investment alternative.
Yet, people may be sceptical about investing if they don't know about them in detail. Here's a short guide that will help you understand everything about mutual funds.
A mutual fund is an investment process where funds are raised to invest in different equities, government securities, bonds, and other assets. Companies eligible to run mutual funds build fund houses that handle the transactions and manage the funds.
Before investing in mutual funds, you must learn to invest in mutual funds to make a secure investment.
The prime factor in investing in MFs is considering the risk factors. No one can claim that this fund category is entirely risk-free, and the other has high risk. It all depends on different scales and parameters.
There is an expense ratio for each fund. Compared to the regular ones, direct plans charge less. As a result, you can expect better returns with immediate plans than regular ones. Such standard methods of mutual fund schemes are not different from each other. The only difference is that there is no agent or broker between the immediate plans, so zero commission is applied.
Suppose a particular MF gives a 10% consistent return, and another one provides +17% returns in the first year and -10% returns in the second year. So, where is the consistency? If a fund faces a 6% fall in a year, it has to generate around 11% returns to cover the loss. 5% return. It means the fund that can maintain consistency in return is better for a long-term basis.
Automated investments via SIPs are the best way to manage your investments and savings with discipline in mutual funds. They also keep you safe from market volatility. You can buy more units at the same price when the market drops and generate higher returns.
Learn about mutual funds based on their structures, fund size, securities, and investment strategies. You can classify them into different types.
Mutual funds are the most reliable, time-tested method for growing wealth. The potential to offer higher returns on your capital is commendable. If you plan to invest, Mutual Fund investments on Fi are commission-free. With its intuitive user interface, suited for novice & seasoned investors, you can select from over 900 direct Mutual Funds. Plus, Fi's 100% secure as it functions under the guidance of epiFi Wealth, a SEBI-registered investment advisor. To help simplify the steps involved, you can invest daily, weekly, or monthly via automatic payments or SIPs — created with one screen tap. Moreover, Fi offers 100% flexibility with zero penalties for missed payments.
Mutual funds are highly reliable; you can understand the growth process with time. You can start your investment even with a smaller amount of INR 500 and a reliable trading app. If you want a reliable investment, SIPs would be your best option.
Mutual funds are the best options for beginners because there are hundreds of options. As these markets are highly diversified, an individual can perform sufficient research before investing in this market. As a result, the risk is moderate.
