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Mutual funds are financial products built to provide good returns to the investors and eventually create wealth.

The money is collected from various investors and an experienced person (mutual fund manager) would invest the money in various stocks and debt instruments.

For example, equity mutual funds will invest in equities(stocks) and debt mutual funds will invest in debt instruments like bonds. Balanced and hybrid mutual funds will invest in both equities and bonds.

Equity-based mutual fund funds are further divided into various categories. For example, one of the categorizations is on the basis of company market capitalization into large-cap, mid-cap, small-cap, multi-cap, etc. Debt funds are divided into short term debt fund, long term debt fund, ultra short term debt fund, liquid fund, etc.

Each category of mutual fund has a different risk vs return profile. For example, equity mutual fund provides a higher return than debt mutual fund but the risk is also high. Risk is in terms of volatile returns.

Not everyone is an expert in stock picking. Moreover, individual stocks are too risky. A company can even go bankrupt.

Mutual funds invest in multiple stocks that diversify the investment. Hence, if the stock falls then it may get compensated by another stock.

The stock selection is done very carefully by experts with extensive knowledge. Another reason is the stock price which makes it difficult to invest a small amount.

For example, if you want to invest directly in MRF stocks, you would need Rs 71,592 as of today to buy a single stock. Whereas, you can invest as low as Rs 500 in the mutual funds.

SEBI being the apex body for Protection of Investor Interests ensures that the Mutual Funds comply with all its Regulations. The Trustees of the Fund are responsible for monitoring its performance and compliance of SEBI Regulations.

The risk depends on the fund category. An equity fund is more risker than a debt fund.

Within equity fund, small-cap is riskier than a mid and large-cap, mid-cap is riskier than large-cap.

If we compare with other investment options, equity mutual funds are less risky than individual stocks as they work on the concept of diversification.

With the right knowledge about mutual funds, you can mitigate the risk and create wealth.

Ideally, you would want to buy at the lowest level and sell at the highest level to maximize profit. But nobody knows when will you have the lowest point. Hence, do not wait. Invest now!

As mentioned earlier, nobody knows if the market will rise or fall in the near term.

The strategy of lump sum vs SIP depends upon the current market situation. If the market is undervalued, then the lump sum investment is a good option. If the market is overvalued then it is better to go for SIP.

Before you select the mutual fund, you need to shortlist the mutual fund category.

Debt mutual funds are low-risk low return category and equity mutual funds are high-risk high return category.

Risk in terms of return where high risk means high fluctuation and even a negative return in the short term when the market falls.

So the first step would be to identify the financial goal with duration and expected amount target.

We don’t know if the market will rise or fall in the short term. For any short term financial goal, it is better to invest in low-risk low return debt funds.

Always built an emergency fund by investing in liquid funds to take care of the unexpected expenses.

For mid to long term financial goal, invest in equity mutual funds with exposure in large-cap, mid-cap and small-cap category.

You can’t always expect the market to rise, it will rise and fall in the short term but the long term trajectory is always upwards.

Hence, you can take advantage of the market fall by investing more. This would fetch you more units of mutual funds due to lower NAV. Eventually, when the market will recover, you will be rewarded with higher profits.

You just need a dedication to spend time and learn about how the security market works. It will take a few months of dedication and experience.If you go with the help of Distributer (Agent) and Choose Regular Fund, You need not Study Hard .

Index fund is a passive style of investing which replicates an Index. For example, a Nifty 50 Index fund would replicate the “Nifty” Index which comprises 50 companies.

The investment would be in proportion to the weightage of each company in the Nifty.

The best part of an Index fund is their low expense ratio and hence more return.

Historically, Index funds have been very popular in the developed market. However, in India, the expert's claim that actively managed funds can provide higher profits as compared to the Index fund and it has been the case in the past few years where a lot of actively managed funds have outperformed Index fund.

However, in the last couple of years, the Index fund has outperformed most of the active funds.

Considering different viewpoints, I would suggest to Invest in both actively managed funds as well as an Index fund.

Please note that currently, the Index funds are only in the large-cap category and the small and mid-cap investment can only be done with actively managed funds.

You also have ETF’s which are similar to Index fund but you need a trading account for the same.

What if you invest Rs 100 and get a return of Rs 10 but finally end up getting Rs 107.5 instead of Rs 110?

This would happen if your expense ratio is 2.5% which is a case in regular funds as it includes both mutual fund house fees and agents commission.

The Index funds, for example, have an expense ratio of as low as 0.05% which means you will get Rs 109.95.

Hence, it is better to go with funds with a low expense ratio. However, if the fund has a low expense ratio but the return is also low then it is not a good option.

No! Do not get tempted to invest in funds only on the basis of historical return. A fund might provide a great return on a specific year but not guaranteed to provide a great return in the future.

A good fund should always be able to beat the benchmark. For example, a large-cap fund would benchmark it against Nifty 100. Moreover, the standard deviation should not be too high. It means the fund should not fluctuate a lot.

Diversification is very important. However, over-diversification is not bad. A decent portfolio can have 7–8 funds with investment in different fund categories.

First step would be to get your KYC done. Once your KYC is done, you can start investing directly.

Read good books, blogs, and articles. Stay updated with economic activities at the national and international levels. The more you learn and understand about mutual funds, the more confident you become with your investment and the fewer mistakes you make
Earn…Save…Invest…repeat
Mutual Funds are the best choice for those who want their hard-earned money to work equally hard . Our Wealth Management plans will build & manage a high-performing portfolio curated to your life’s needs. Mutual Funds have emerged as a biggest and most sought-after investment option in modern times. But with so many funds and schemes in the market, it has become mind-boggling to choose the right fund/scheme. Having invested in mutual funds, there is another more herculean task of managing the funds, knowing their folios and current NAV. We will help you in evaluating the correct fund/scheme suitable to you based on your risk-bearing appetite and also help you in knowing the current NAVs and managing your folios across different funds/schemes.

Mutual Fund Investment Philosophy

• Open Ended Funds
  An open-end fund is a diversified portfolio of pooled investor money that can issue an unlimited number of shares. The fund sponsor sells shares directly to investors and redeems them as well.
• Close Ended Funds
  A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund.
• Equity Funds
  An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds.
• Debt Funds
  A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds.
• Hybrid Funds
  Hybrid funds are mutual funds or exchange-traded funds (ETFs) that invest in more than one type of investment security, such as stocks and bonds.
• Income Funds
  Income funds are mutual funds or ETFs that prioritize current income, often in the form of interest or dividend paying investments.
• Real Asset Funds
  Real assets are physical assets that have an intrinsic worth due to their substance and properties. Real assets include precious metals, commodities, real estate, land, equipment, and natural resources.
• Sector Funds
  A sector fund is a fund that invests solely in businesses that operate in a particular industry or sector of the economy. Sector funds are commonly structured as mutual funds or exchange-traded fund.