Here are a few quick FAQs for first-time mutual fund investors.
How much should I invest?
First identify your goals; This will help you determine the amount you need to invest to complete each goal.
Should I invest in equity or debt programs?
It primarily depends on your investment objective, investment horizon and risk profile. If you’re investing to meet a short-term goal that needs to be met in a few years, debt programs are ideal for you because, for the most part, these programs are risk-free.
However, if you have a long-term financial goal that needs to be reached after about five years, you can invest in stock mutual funds as they have the potential to offer higher returns than other asset classes.
What is the Minimum Amount Required to Start Investing in Mutual Funds?
It is important to start investing and the beauty of mutual funds is that you can start with as little as Rs 100 per month. The mantra is: “Start and stay invested for the long term”.
If I start with Rs 100 per month can I keep paying as my income increases?
Yes you can. A mutual fund allows you to make additional purchases in the same funds.
Is the systematic investment plan the only option or can I also invest as a lump sum?
It depends on how much money you have to invest. A lump sum investment gives more time to invest and results in higher returns because the power of compound interest (basically earning interest on interest) increases over time.
On the other hand, a SIP (the predetermined amount invested at regular intervals) gives you the benefit of Rupee Cost Averaging (RCA), which essentially smooths out the volatility of the market over the long term. Since a fixed amount is invested at regular intervals, you can buy more units at lower prices and vice versa.
Since you are new to investing in mutual funds, you will need to invest with the help of a mutual fund advisor to ensure smooth onboarding, expert opinion, and careful program selection.
Nivesh.com is a paperless experience for investors. The platform simplifies the process by categorizing funds by general investment objectives and curating further schemas to create a shortlist. The goal is to reduce complexity while ensuring an objective investment process. After initial account creation, investors can start trading mutual funds in a few simple steps. Post-transaction, the platform helps track portfolio performance with timely alerts and notifications.