Before you investing mutual fund make sure through research yourself or take advice from a financial planner. just follow the below article then start learning more.
Understand your Portfolio, Age, income level, at least you have to save 6 months as reserve money Pvt employee, in case of govt employee 3 months, self-employed 1 year, next focus on Home loan margin money, life insurance, etc.
there are less risk low reward Post office saving schemes backed by the Indian government.
your income level & Age plays a role in your cash flow towards debt or asset.
don’t invest in Mutual fund unless you understand how a mutual fund works & their charges.
- The flexibility you can invest a minimum amount of 500 as SIP. You can exit anytime but before 1 year (there will exit load 1-3% of your invested+earned = fund).
- You can invest monthly Basis (SIP) also weekly once, weekly twice with the flexible amount (not a fixed price) but minimum 500.
- Higher returns (12%Avg) than saving schemes but sometimes lower returns, the capital loss too. this called market risk
- Tax saving under section 80C in ELSS Tax Saving Mutual Funds.
How do mutual funds work?
retail investors like you, contribute to Mutual fund company. they pool the money from retails investors to make Big Fund (in crores). They allocate a fund manager. he can trade with your money in the stock market. to make profit or loss results declared the end of the day called as NAV.
You>>Mutual fund company >> Fund manager >> Stock market >>Trade>>Profit/loss>> Fund>>You.
Charges: 2.25 – 2.5% charges on your invested amount calculated daily after deducting this you will see NAV or your fund growth.
NOTE: as an investor, we are leveraging other people time. so they are charging 2.25-2.5% commission.
Mutual funds Risks
Most of the retail investors withdraw their money when the stock market is falling.
- Credit Risk: your invested money may lose in the share market. (you can check it on fund performance).
- Return risk: low returns as compared to FD and other saving interest rates sometimes.
- Taxes: Capital Gain tax, STCG 15% within 1year on profit, LTCG 10%(above 1 lakh) after 1 year.
- Agent commission: 1% in regular plans it includes in your total MF expense ration ex: 2.25 for SBI bluechip mutual fund.
Documents Required for MF
- Recent passport size photograph
- PAN card (Proof of ID)
- Aadhaar card ( Proof of Address)
Check KYC Status with PAN Number.
KYC Registration Agency (KRA) (Karvy, NSE, CVL, etc)
KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc),
BUY MF Online without a Broker?
This way here: you have to visit the https://www.amfiindia.com/ >> Investor corner>>Invest online in Mutual Funds >> ex (SBI>>AXIS, ICICI, HDFC etc)>>SBI>>SBIMF.com (login with FB) . all you have to do visit Mutual fund company websites.
if you want to hold all (mutual funds by different AMCs) portfolio at one place then you have to use other platforms Karvy, mf utilities
above helps to hold all mutual fund by different companies at one place.
- Through Demat and Online Trading Account
- Online Portals
- Directly with the AMC
- IFAs or independent Financial Advisors,
- intermediaries distributor or agent
- Direct Plans: reduces the distributor expenses lower expense ration and higher NAV when compare to Regular funds
After registering with Mutual fund plans you can create ECS service to directly credit every month SIP basis.
best mutual funds to invest in for beginners
First, you have to Systematic Investment Plans (SIP) to sustain in market conditions.
understand the types of mutual funds,
there is growth, dividend, dividend reinvestment, dividend payout funds available based income.
equity & debt based on risk, tax-saving funds elss and Fixed lock-in period funds Closed-ended plans there.
Most Of the Mutual fund companies have top Performing Funds.
based on Tax saving, Debt, equity, hybrid scheme.
Large-cap, Midcap, small cap, etc. all the fund results based on fund manager performance.
example here SBI Mutual Funds top 5
- SBI Mutual Fund
- Reliance Mutual Fund
- HDFC Mutual Fund
- Aditya Birla Mutual Fund
- ICICI Prudential Mutual Fund
above are the top 5 Fund Companies based on the popularity of investors and others (LIC,
Franklin Templeton .)
Ex: TOP Performing funds in SBI
|Top 5 SBI Mutual Funds||1yr||3yr||5yr||10yr|
|Arbitrage Opportunities Fund (Hybrid: Arbitrage)||6.06||5.92||7.16||7.14|
|Banking & Financial Services Fund-Regular Plan (Equity Banking)||16.1||18.74||–||–|
|Bluechip Fund (Equity large Cap)||9.86||11.48||17.25||11.33|
|Consumption Opportunities Fund (Equity FMCG)||28.26||19.43||17.68||22.03|
|SBI Dynamic Asset Allocation Fund (Hybrid Asset Allocation Fund)||10.36||9.58||–|