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How To Make Your First Mutual Fund Investment? Research Team | Posted On Friday, November 03,2017, 04:46 PM

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How To Make Your First Mutual Fund Investment?



You want to make your first investment in mutual funds. The Problem...You don't know how to invest in mutual funds. You're afraid...What if you lose money in mutual funds? Ignorance breeds fear and if you don't understand mutual funds, its foolhardy to invest in them. The Government has launched a program called Mutual Funds Sahi Hai to educate the common man on the benefits of investing in mutual funds.

As bank FD rates fall and small saving schemes offer lesser returns, you and other citizens are rushing to invest in mutual funds. Before investing in mutual funds, do take time to learn about them.

Want to know more on mutual funds? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

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Start Your First Mutual Fund Investment In India

Before investing in a mutual fund, first learn what is a mutual fund. A mutual fund collects money from you and other investors and invests in stocks, bonds or a mix of both, depending on the type of mutual fund. A fund manager manages this money and charges a small fee which the fund house takes from your investment. You get units of the mutual fund in proportion to your investment.

1. Choose between the regular plan vs direct plan mutual fund

You can invest directly with a mutual fund through the Direct Plan of a mutual fund scheme. You simply visit the website of the mutual fund or their authorized offices and submit the necessary documents to make the investment. Investing in the Direct Plan of a mutual fund scheme, helps the mutual fund save on mutual fund distributor commissions and this benefit is passed to you, through lower costs.

This translates to sizeable returns over a long period.

If you do not understand mutual funds, take the help of a financial advisor. You will have to invest in the regular plan of the mutual fund scheme. The financial advisor will help you with documentation, research and monitoring your investment.

SEE ALSO: How To Choose The Best Mutual Fund?

2. Understand KYC Form For Mutual Fund

If you are a first time investor in mutual funds, you must complete the KYC (Know Your Customer).  This is a one-time mandatory process. You will have to fill the physical eKYC form. You then attach a photograph, a copy of the PAN card which serves as an identity proof and a valid address proof like Passport, Aadhaar or an electricity bill.

You then submit this along with the investment form at the mutual fund office.

It is compulsory for mutual funds to obtain your and other customer's Aadhaar Number. This number will be linked to your respective account. A deadline of December 31st has been set for mutual funds to link your and other customer's Aadhaar.

SEE ALSO: How To Link Mutual Funds With Aadhaar?

3. Choose a Mutual Fund based on your financial goals

Invest in mutual funds depending on financial goals, the ability to take risk and your time horizon. If your time horizon is 1 year to around 3 years to meet financial goals, then invest in debt/arbitrage mutual funds. For financial goals between 3-5 years, you must consider hybrid funds which invest in a mix of equity and debt.

For financial goals longer than 5 years, take a look at equity mutual funds which are risky but can give good returns.

Investing in mutual funds is not something you do in a hurry. You have to carefully choose the mutual fund house and take a close look at the track record of the fund manager. How is the performance of the management and the fund manager? It's your hard earned money. So be careful with it. Be Wise, Get Rich.

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