How to invest in mutual funds

How to invest in mutual funds

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.


How to invest in gold and other commodities

Did you know that you could invest in some of the most common everyday items we use in our daily life? Be it food items, gold, silver, oil or gas, we can trade in such items. This is all possible thanks to commodity investing.What is commodity investing?Raw materials that are consumed directly or used to make other products are known as commodities.This includes:Commodity investing is the process in which different investors (individual people, banks, and corporations) buy and sell these commodities in order to earn high returns. How to invest in gold and other commodities:1) Physical ownershipThe simplest way to invest in a commodity is to buy the physical good directly. For example, you can invest in gold by buying 10 gold coins. When the price increases, you can sell the commodity and convert your investment into cash. This method of investing comes with its own set of challenges. For instance, you have to figure out where to store the commodity. You want to ensure that your gold is in a safe place. And when it comes to soft commodities such as corn, wheat or coffee beans, issues such as spoilage and insurance come into the picture. 2) Exchange traded funds (ETFs)ETFs are funds that trade like stocks. You can purchase ETFs of commodities and trade them in the market in order to earn profits based on change in price movements. Investment in commodity ETFs is a good way to diversify your portfolio. The best part is that unlike physical commodities, it is very easy to buy and sell ETFs. You can also hold these investments in your regular investment accounts. However, make sure that you thoroughly review the commodity ETF before investing in order to get the best returns. 3) Stocks of companiesAnother way to invest in gold or other commodities is to buy shares of companies that manufacture these commodities. For example, you can buy shares in a gold mining company to gain indirect exposure to gold. Similarly, there are many companies in the mining, energy and agriculture sector. Investing in these companies is a good way to gain exposure to these commodities. 4) Future contractsYou can buy or sell a commodity in the futures market. This means you can buy a fixed quantity of the item at a fixed later date. For instance, you can take a futures contract for coffee in order to protect yourself against rising prices of coffee. In case the price of coffee does rise after the specific period, the value of your investment would increase too. But if the price of coffee decreases, your future contract value decreases. Another way to invest is to enter into an agreement with a buyer to sell the commodity at a fixed price at a fixed later date. Futures contract is an easy way to invest in specific commodities without actually having to own the commodity directly.ConclusionInvestment in commodity ETFs is a good way to diversify your portfolio. Understand how the different avenues work before investing. This is to ensure that your investment is protected and you can earn good returns.     Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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How to invest in real estate

Everyone has financial goals. And buying a house for the family comes somewhere at the top of the list for most Indians. This is a very important milestone when it comes to investment planning. However, the scope of real estate investment is more than that. In fact, investing in real estate offers an opportunity to make good financial returns. Here’s how:1) Rent a house (or even a room)Don’t know anything about real estate investing? Don’t worry. You can start small if you are a beginner. Do you have a spare room or an apartment at the moment? If so, you can take in tenants and earn a steady monthly income. This is a good way to earn returns on an asset instead of letting it sit idle. So, even if you earn around Rs 5,000-6,000 per month, it can become a substantial corpus by the end of a couple of years. 2) Buy, fix, sellOne of the best things about investing in real estate is that there are loads of opportunities. Look around your city. There can be a lot of underpriced homes. For example, imagine you find an old house that is in a good area in the city. Here is what you need to do: Many people call this as house-flipping. 3) REITsYou can also invest in real estate through Real Estate Investment Trusts (REITs). These are companies that own commercial real estate such as apartments, hotels and retail spaces. All REITs are listed with the stock exchange and investors can directly invest in properties. Buying commercial real estate can be extremely costly and out of the reach of regular investors. Through REITs, you can participate in ownership of commercial real estate without having to actually buying commercial real estate. As a result, investors with budgets as small as Rs 2 lakh can explore the real estate sector and make profits. 4) Real estate stocksWhat if you don’t want to invest directly in real estate properties? Well, there is another way. You can invest in stocks that operate in the real estate sector. There are a lot of real estate companies such as DLF, Oberoi, Unitech that are listed in the stock market. By carefully researching these stocks, you can invest and earn good returns. ConclusionThese days, there are lots of investment opportunities for investors in the real estate sector. India is a developing country and there is huge potential for real estate. And the best part is, you don’t actually have to buy a house to invest in real estate!      Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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