How to Invest in Mutual Fund in India

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Mutual Funds are the funds under which a management entity fetches the money from several investors and invests this money into equity, shares or other instruments. These Managing Companies will charge for their services and pay back to the investors in the form of the dividends and returns. The mutual fund offers the facility to easily invest in complex financial market where it is not easy for everyone to obtain expert knowledge, obtain information and to keep continuous watch over ups and down of stock market.

Since last few years, mutual fund industry is gaining strength in India. More & more numbers of investors are joining the market and total inflow of fund in mutual fund industry has also witnessed a step rise. In nearly last 3 years more than Rs. 3 lakh crore of inflow has been witnessed in mutual funds. The best part is the steep increase of retail investors. Mutual fund industry has been able to bring many attractions of mutual funds to the notice of general public.

  1. Like a SIP (Systematic Investment Plan) in Mutual Fund can be started with Rupees as low as 500 per month.
  2. People are considering mutual fund investments to be less risky than investment in equities or commodities directly.
  3. The best attraction has been the sustainable returns which many funds have given during last three years.
  4. It is a simple and easy to understand concept that it is a sort of investment where larger number of investors pool their money together to invest in quality products where the working affairs are being managed by persons qualified and experienced in same field.
  5. In Mutual Funds this expertise is possible because of economy of scale as the number of investors is very large.

Mutual Fund investments in India are on increase and money in these funds may be used for developing infrastructure in the country.

Wild varieties of options are available for mutual fund investments.

Few Mutual Funds are dividend based funds also, where investors get dividend income in addition to rise in value of the units held by him.

Few mutual funds which have given good returns in last 3 years. This return has been with less risk (in comparison to Risk with equity investment) and tax benefit schemes.

Procedure to invest in Mutual Fund

One can invest in mutual fund through brokers or can straightway approach to mutual fund braches.

  • One can go for online by visiting through the brokers/distributors or online broking sites.
  • One may also consult a mutual fund adviser or financial planner in beginning before making investment in Mutual Fund.
  • One has to provide KYC (Know Your Customer) details under which one has to fulfill his demographic detail. KYC is must to invest in any type of Mutual Fund.
  • To begin investing in Mutual fund, one has to submit following document with the concerned branch:
  1. Address Proof/Aadhar Card/ License
  2. Date of Birth Proof
  3. Pan Card
  4. Photographs
  • Then one has to go for IPV (In Person Verification) to show ones physical existence. One can submit his KYC details online by clicking on eKYC as many Fund houses have started providing this facility electronically through their websites.
  • After submission of KYC, go on the website of Mutual fund house and click on the registration link for a new account.
  • The link will direct to a page which may ask for bank account details and sometimes an OTP (one time Password) has been sent to registered mobile number for account verification.
  • Once account is created, one can simply login account and select Mutual Fund Scheme and submit your request.

In one next article in this series we would give knowledge about types of mutual funds and will give a list of Mutual funds which have given good returns in last year.

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