Introduction:
Hello everyone, today I’m going to share with you about the mutual fund investment process. Kindly stay tuned and learn more about the investment journey. As we are well aware the current situation of indian stock market and, starting of 2025, the Indian share market is very volatile as of now, and markets are falling continuously. In this case, if you are new to mutual fund investment, you are in the right place. To learn more, read the entire article. I will try to make it very simple step by step.
What is mutual fund.
A mutual fund is a pool of money from people, and investors to invest in various classes of assets such as stock, bonds, gold etc. Fund managers handle these funds on behalf of investors and charge some fees for the investment. there are various types of mutual fund schemes exist.
A) Open-ended scheme: Open-ended scheme means investors can buy mutual funds at any time and exit at any time without facing a lock-in period.
B) Close-Ended scheme: Close-ended scheme means investors will have a lock-in period and can’t exit at any time, but they can enter at any time.
Two ways investors can invest in mutual funds.
A) Direct Plan: Direct plan refers to when investors directly invest in mutual funds through AMC’s website. For example, Parag Parikh Flexi Cap is a fund house, and you want to invest in so go to the Parag Parikh Flexi Cap website and buy it with a minimal fee I will discuss the below cost fee.
B) Regular plan: When an investor buys a mutual fund through a broker, and an advisor is called a regular plan. There will be more fee comparability to the direct plan.
What Is SIP. Systematic Investment Plan and Lumpsum investment.
Systematic investment plan (SIP): SIP happens once in a month and it’s an easy way to invest in mutual funds in installments. Simply set installments every month and invest in a mutual fund, Minimum amount you need to invest will be 500. SIP is very useful for the long-term because you will invest every month and it is a great method for a salary person. The best part of SIP is you don’t need to have a huge amount, you can simply start with a low amount every month.
Lumpsum investment: Lumpsum amount is a one-time investment but you can invest through Lumpsum any time and it is suitable for businessmen. Lumpsum is very effective when a mutual fund’s NAV is low. In simple term it create positive wealth in a falling market.
The benefit of investment in a mutual fund:
Liquidity: Mutual funds have high liquidity in comparison to other funds or asset classes. Buy any time and sell any time.
Diversification: In mutual funds investor can easily diversify their investment because there is various type of company shares involved from small capital to large capital and several types of sectors involved.
Lumpsum investment. In mutual funds there is highly qualified fund managers are involved who manage your fund on your behalf.
Tax benefits: Various tax advantages investors get through mutual funds.
Regulatory: Mutual fund houses are regularly monitored by the SEBI Securities Exchange Board of India so your money is very safe in a mutual fund but also involves risk, terms and conditions before investing consult with your financial advisor.
No Need to track mutual fund: As I said mutual fund is handled by a professional manager.
Affordability: You can easily start a mutual fund investment just with a simple and minimum amount through online, applications, and websites.
Follow steps to invest in a mutual fund:
1- Invest through a mutual fund distributor: If you are confused how to invest in a mutual fund simply you can take help from several mutual distributors in India.
2- Online platform: Groww app, Zerodha coin, and more applications available at ”Google Play Store”. Simply download and do some paperwork and start investing. Direct plans and regular both options are available across platforms.
3- Investment through Asset Management Company (AMC): Simply visit AMCs official website and choose fund and invest. It’s also a very easy way you can invest.
4- Registered Investment Advisor: Without AMC’s commission investors opt direct plan through Sebi registered investment advisor because RIAs work under the AMFI framework.
Charges and fee:
1- Expense ratio: Expense is nothing but it is the commission which given to AMC for managing the fund of investors. Basically expense ratio charges from 0.5 % to 1.5%.
2-Exit Load: Exit loads are those charged when an investor redeems the fund before one year, basically it charges around 1%.
3- Securities transaction Fee: For open-ended 0.001%, 0.25% close-ended scheme and it applies on selling value and stamp duty for buying unit 0.005%, 0.015% transferring unit between demat account.
Conclusion.
I hope you have understood how to invest and ways of investing. According to the current situation of the stock market, mutual funds is good for long-term investment. A mutual fund is safe because it is always handled and managed by fund managers who are highly qualified and have great experience.
Disclaimer:
This is not a buying and selling recommendation kindly consult with your financial advisor before investing in any mutual fund.