How to Invest in Mutual Funds?
How to invest in Mutual funds are pretty sophisticated products and for a first-time investor, becoming anxious is very common. However, you can easily start your investment journey by having a basic understanding of how mutual funds work.
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1. How do Mutual Funds work?
Mutual funds areinve statement havens which pool savings from a number of investors under a particular scheme managed by an asset management company (AMC). The pooled money is then invested in securities like equity shares, bonds according to the scheme’s investment objective. The fund manager, appointed by the AMC, manages the investment portfolio as per the market movements to create wealth for investors. The fund house charges an annual fee called expense ratio from the investors to manage their portfolio. The investors usually make money by way of regular dividends/interest and capital appreciation. They may choose to reinvest the capital gains via a growth option or earn regular income by way of dividend option.
2. Why should you Invest in Mutual Funds?
1.Convenience
Investing in mutual funds is very convenient. With a lot less paper-work and market-monitoring, you can get exposure to a broad-based market and investment as per your requirement. Moreover, the facility of switching between funds and portfolio rebalancing helps to keep your returns in line with expectations.
2. Low initial investment
With as low as Rs 500, you can get access to a diversified mutual fund portfolio. Moreover, you get the flexibility to invest via a lump sum or a systematic investment plan (SIP).
3. Professional fund management
In mutual fund investing, your money is managed by a professional fund manager who is backed by a team of researchers. He formulates the investment strategy to do asset allocation. He gets real-time access to the financial environment and adjusts your mutual fund portfolio accordingly. They have the investment-related skills which retail investors may lack.
4. How to Invest in Mutual Funds?
You can invest in Mutual Funds in a paperless and hassle-free manner at ClearTax. Using the following steps, you can start your investment journey:
Step 1: Sign up for an account at cleartax.in
Step 2: You need to enter your details like the amount of investment and investment period
Step 3: Get your e-KYC done in less than 5 minutes
Step4: Invest in your favourite mutual fund from amongst the hand-picked mutual funds
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Mutual funds arose an alternative to investment in equity because most investors neither had the time nor the acumen to monitor stock trends or be updated with the latest financial news to keep their investments optimum
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