How to Get Started With Mutual Investment Plans in India

Mutual investment plans or mutual funds are a popular investment option in India, offering a diversified portfolio managed by professionals. They are ideal for investors looking to start their investment journey or diversify their existing portfolio. If you are looking for guidance on understanding how mutual investment plans work or choosing the best mutual investment plans, we’ve got you covered. 

The below guide will help you with all the information you need to get started with mutual investment plans in India and help you make an informed decision.

Understanding Mutual Investment Plans


Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities like stocks, bonds, or other assets. They are managed by professional fund managers who make investment decisions based on the fund's objective. The terms and conditions vary from one mutual fund to another, so it’s important to stay in contact with the fund manager for clarity or updates.


Mutual Funds vs. Chit Funds


Mutual funds and chit funds are both financial instruments that pool money from multiple investors, but they operate in different ways. 


Mutual funds are professionally managed investment funds that invest in a diversified portfolio of securities like stocks, bonds, and other assets. Investors in mutual funds earn returns based on the performance of the underlying securities. 


In contrast, chit funds are more like a savings and borrowing scheme among a group of individuals. In a chit fund, a group of people contribute a fixed amount regularly, and each month, one member receives the total contribution as a lump sum, determined through an auction. 


Not all chit funds are managed formally and offer the same level of regulatory oversight, so it’s important to invest through a registered chit fund such as Margadarsi Chit Fund. Margadarsi chit fund plans offer transparency to investors and ensure that your money is safe.


                               

Types of Mutual Funds


Mutual investment plans come in various shapes and sizes, with different requirements, returns, and risk factors. Here are some of them.


  1. Equity Funds: These invest primarily in stocks, offering higher returns but with higher risk.


  1. Debt Funds: These invest in fixed-income securities like bonds and are considered lower risk.


  1. Hybrid Funds: These invest in a mix of equities and debt, offering a balance between risk and return.


  1. Index Funds: These replicate the performance of a specific stock market index like the Nifty or Sensex.


  1. Sector Funds: These focus on specific sectors like banking, IT, or pharma.

Steps to Get Started With Mutual Investment Plans

Wondering how to choose the best mutual investment plans and get started on your journey to investing? Here is a step-by-step guide.


1. Define Your Investment Goals


Before investing, determine your financial goals, whether it's wealth creation, retirement planning, or saving for a specific goal like buying a house or education.

2. Choose the Right Mutual Fund


Select a mutual investment plan that aligns with your investment goals, risk tolerance, and investment period. You can seek advice from a financial advisor or use online resources to research funds.

3. Complete the KYC Process


To invest in mutual investment plans, you need to complete the Know Your Customer (KYC) process by submitting your identity proof, address proof, and photograph to the fund house or a KYC registration agency (KRA).


4. Select the Mode of Investment


You can invest in mutual investment plans through two modes: lump sum (one-time investment) or Systematic Investment Plan (SIP), which allows you to invest a fixed amount regularly.

5. Fill the Application Form


Once you have chosen mutual investment plans and mode of investment, fill out the application form provided by the fund house or the online platform through which you are investing.

6. Make Payment


For lump sum investments, make the payment through NEFT, RTGS, or cheque. For SIPs, set up an automatic debit instruction from your bank account.

Tips to Successfully Invest in Mutual Funds


The below tips will help you make the best decisions when investing in mutual investment plans.


  1. Diversify Your Portfolio: Invest in a mix of funds to spread your risk.


  1. Stay Invested for the Long Term: Mutual funds are best suited for long-term goals, so avoid frequent buying and selling.


  1. Review Your Portfolio Regularly: Monitor your investments and make changes if your financial goals or market conditions change.



Mutual funds offer a convenient and professional way to invest in the Indian market. By understanding your goals, choosing the right funds, and staying informed about your investments, you can create a successful mutual fund portfolio that helps you achieve your financial objectives. The above guide will help you begin your journey of investing in mutual investment plans.








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