How To Invest In Mutual Funds In India?

Gone are the days when investing in mutual funds was limited to the affluent few. Today, Mutual Funds have become one of the most favourite investment options amongst individual investors. 

While investing in stocks is not something everyone is brave enough to try, investing in mutual funds is something even more conservative investors are happy to dabble in. So, how do you invest in mutual funds in India? Should you invest in mutual funds through your bank? Or is investing using a mutual fund app easier? 

In this piece, we will talk about the various paths you can take as an investor and help you pick the best way to invest in mutual funds. Before we talk about the steps of investing in mutual funds in greater depth, let us understand the fundamentals & underlying concepts.

If you are already aware of the basics covered here, take a look at some Tips for New Mutual Fund Investors

What Are Mutual Funds?

Mutual funds are a pool of money collected from a diverse set of investors. This pool of money is invested in various market securities by the Fund Manager in order to diversify the risk and maximize the profits. 

How Can I Start Investing In Mutual Funds?

Now that you have understood the fundamental terminology used in mutual funds, let’s cover how you can invest in mutual funds.

Ways To Invest In Mutual Funds

• Do it yourself apps (Good for new investors with basic knowledge)
• Through your bank (Not recommended due to hard-selling executives)
• Mutual Fund based on expert advice (Ideal for busy investors)
  

Now let’s look at some key pointers that you must remember before you start investing:

• Research, research, research (or invest based on mutual fund advisory)
• Invest based on your risk profile
• Consult a trained financial professional (Wealth Coach)
• Get advice from a reliable expert
• Start with a low amount 
• Invest through a SIP
• Diversify
• Be patient
  

Building A Perfect Mutual Fund Portfolio

As a new investor, you might wonder what a portfolio means. Since this is an integral part of investing in Mutual Funds, we have a dedicated blog that tells you exactly what you need to know about building a perfect portfolio.

It explains Cube’s bucket philosophy that prepares you for emergencies and helps you build the perfect portfolio for your short-term, medium-term & long-term goals.

You can read all about it here Building an Investment Portfolio: The Complete Guide

How Does Cube Wealth Help You?

Our Financial Advisory partner, Wealth First, curates a list of the best Mutual Funds that you can invest in at any given time. This will make it easier for you as an investor to look through a manageable list of options and decide instead of the thousands of Mutual Funds available otherwise.

Instead of choosing from the over 17,000 mutual fund variations you only have to pick from a few quality options. Even then you get guidance to ensure you only with the best mutual funds for your financial goals.

Cube’s advisors even tell you when to sell your Funds in case the need arises. All this is available in one simple, intuitive, and easy to use app which shows you only what you need to see. 

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Mutual Fund Jargon Simplified

Financial jargon can be pretty difficult to understand and keep up with. New investors might especially find it hard to make sense of some of the terms that are used in the world of wealth creation. But do not worry! We have compiled a list of some common jargon and their meanings here:

• Annualised Returns: It is simply the geometric average of the amount of money the investment returns (earns) each year over a given period of time
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• AMC: The Asset Management Company that invests the pool of money collected in various securities and assets 
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• AUM: Asset Under Management is basically the total market value of all the financial assets controlled by a Mutual Fund 
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• Benchmark: Essentially, it tells how a particular Fund is performing in comparison to the Market and other similar Funds 
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• Entry Load: This is the fee charged (in %) when a Mutual Fund scheme is purchased. This fee is deducted from the amount invested in the scheme
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• Exit Load: Similar to Entry Load but reverse. This is the fee charged (in %) when a Mutual Fund scheme is sold
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• Expense Ratio: Indicates (in %) how big a portion of the Fund’s assets is used for its own operating expenses
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• Fund Manager: The person who implements a Fund’s strategy, decides where to invest the money pooled from investors, and when to buy and sell securities
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• Investment Objective: A set of goals determined for a particular scheme
  
• Lock-in Period: A definite time period during which the scheme cannot be sold
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• Market cap:  Represents the total market value of all the shares currently held by stockholders, investors, and company officials in the public domain, which is also referred to as outstanding shares. 
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• NAV: Represents the per-unit market value of a Mutual Fund
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• Portfolio Turnover Ratio: Represents the rate at which securities are replaced or have changed over the past year within a Mutual Fund
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• Systematic Investment Plan (SIP): The option to invest capital in a scheme over periodic intervals of time rather than a lump sum amount
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Already knew these? Start investing!

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