Here are some quick FAQs for first time mutual fund investors.
How much should I invest?
Identify your goals first; this will help you decide how much you need to invest to achieve each goal.
Should I invest in stocks or debt schemes?
It mainly depends on your investment objective, investment horizon and risk profile. If you are investing to achieve a short term goal that needs to be achieved in a couple of years then debt schemes are ideal for you as these schemes are mostly risk proof.
However, if you have a long-term financial goal that needs to be met after five years, you may want to invest in equity mutual fund plans, 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’s 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 “get started and stay invested for the long haul.”
If I start with Rs 100 per month, can I keep adding as my income increases?
If you can. In a mutual fund scheme, you can make additional purchases in the same fund.
Is the Systematic Investment Plan the only way or can I also invest in a lump sum?
It depends on the amount of money you have to invest. A lump sum investment gives you more time to invest and results in higher returns as the compounding power (basically earning interest on interest) increases over time.
On the other hand, a SIP (the default amount invested at a regular interval) gives you the benefit of Rupee Cost Average (RCA), which basically balances out the long-term market volatility. Since a fixed amount is invested at regular intervals, you can buy more units when prices are lower and vice versa.
An important tip!/
Since you are new to mutual fund investing, you should invest with the help of a mutual fund adviser for smooth onboarding, expert opinion and careful scheme selection.
About us!
Nivesh.com is a paperless experience for investors. The platform simplifies the process by categorizing funds based on general investment objectives and selecting more schemes to provide a shortlist. The goal is to remove complexity while ensuring an objective investment process. After initial account creation, investors can transact mutual funds in a few simple steps. After the transaction, the platform helps track portfolio performance with timely alerts and notifications.