A mutual fund is a kind of financial speculation made up of a bulk of money collected from different investors to invest in securities like stocks, equity, and other money market instruments. Mutual funds policies are mainly operated by professional money agents or managers, who allocate the funds and attempt to generate capital profits or income for the fund’s investors.
Firstly Investor Should know how much he/she can Invest?
Investor needs to get the proper idea about his income and reason of investing the money in the mutual fund before the investment process.
Should I invest in Equity, Bonds, Stocks, and other Securities?
It mainly depends on your speculation goal, investment skyline and risk profile. If you are going to achieve a short-term goal that needs to be achieved in a two years, debt schemes are ideal for you as these schemes are mostly risk proof. However, if you have a long-run financial objective that needs to be met after five or more years, you can invest in equity MF policies as these have the potential to offer great returns than other asset classes.
What is the Initial Amount Requires for the First Time Investment?
You can start the investment with the hundred rupee note and after that you can gradually increase the amount as it totally depends on your investment returns.
Can I invest in Two – Three Mutual Funds Together?
MF investors commonly invest in two –three mutual funds in the name of diversification. If you put your money in various schemes it can help you in avoiding the risk density which is associated with mutual policies.
Should I invest in Systematic Investment Plan or in lumpsum too?
It depends on the value of money you have to invest. A lumpsum investment provides more time to investment and results in higher returns as the power of compounding or variable (basically getting interest on interest) increases with time.
Systematic Investment Plan, generally addressed as an SIP, permits you to put your money in small sum continuously in your preferred MF policy. By operating an SIP, a fixed amount is eliminated from your bank account every month of the year, which gradually invested in the mutual policy of your choice.
An SIP (the pre-determined calculated amount invested at a regular interval) provides you the benefit of Rupee Cost Averaging, which basically balances out the unpredictably of the market in the long run. Since a fixed amount is invested at common intervals, you get to buy more units when the prices are less and vice versa.