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A lot of investors around the globe prefer mutual fund investments for wealth creation. This is because of the immense scope and ability of these funds. These funds range over a wide spectrum of variety. Based on your requirements, you can select funds for capital preservation, steady income or high returns in the future. And if you are a novice in investments, this is perhaps the best way to get introduced to financial markets.

Here is how you can invest in mutual funds:

1) Be KYC compliant

It is very easy to buy mutual funds. In fact, you can purchase funds online. But in order to do it properly, you need to have all the necessary documents in order. Ensure you are KYC compliant. If not, you can fill out the KYC individual form to become compliant. Here is a list of other documents you need to provide:
a) The duly-filled application form
b) Identity proof (PAN card, passport, voter’s ID or Aadhaar Card are applicable)
c) Proof of address (passport, driving licence, ration card, insurance copy)
d) Cheque for the investment amount (SIP or lump sum)
e) Third-party declaration form (in case of minors)

2) Identify your investment goals

It is important to have clear-cut investment goals. There are many different types of mutual funds available in the market and each fund has a specific goal. For example, if you wish to avail tax benefits, it is suitable to invest in Equity Linked Saving Schemes (ELSS). If your goal is to earn steady returns, it is best to invest in debt mutual funds.

3) Assess your risk profile

Every investor has a different risk appetite. For example, equity funds invest predominantly in the stock market. These funds have the potential to offer higher returns. But they also come with higher risk when compared to debt funds. Similarly, sectoral funds invest in a specific sector only. So, if a fund has invested in the IT sector, you could be exposed to high risk if the sector crashes. Investing in these kinds of funds without knowing your risk tolerance level can result in losses.

4) Select the right funds

Once you know your list of investment goals and your risk tolerance level, investing becomes easier. There are different kinds of mutual funds. This includes:

5) Maintain an age appropriate portfolio

As you grow older, your goals and ambitions change. Similarly, your mutual fund portfolio must change too. At the beginning, it may be better to invest more in equity funds to earn higher returns. But as you near your retirement age, it is better to shift your investments to safer funds like debt funds or balanced funds. This way, you can preserve the capital during the sunset years of your life. You don’t want to lose a major chunk of your investment money at such as stage in life.

6) Invest through SIPs

One of the best features of mutual funds is the Systematic Investment Plan (SIP). As an investor, you don’t need to bother about rising and falling markets as long as you continue to invest regularly through SIPs. All you need to do is invest a specific sum of money on a regular basis. This can be monthly, quarterly or even annually.

Based on your investment budget and goals, you can decide how much you want to invest. There are many funds that allow you to start a SIP with Rs 500. Over time, you can increase the amount you invest so that you can earn higher returns.


With a strategic investment plan, you can invest steadily in mutual funds and earn an envious warchest to meet your future goals like buying a home or creating a retirement fund. And the best part is you can do it very comfortably.



Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.