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The complete guide to mutual funds

The mutual fund has become a very common term for the Indian investors. It is one of the best ways to grow your money without being afraid of any hidden risks. But most of the people are unaware of the processes and working of the mutual funds. Hence, they make misinformed decisions which curtail their chances of making a profit.

But you can choose a different path for yourself and can ensure rapid growth of your money. How can you achieve it? Well, the answer is really very simple! All you need is a little guidance and we are here to provide it to you. Our guide will help you to make smart decisions and success will come running your way.

  • First stop: Get started with the mutual fund:

There are few perquisites that you need to have to get started with the mutual fund investments. These requirements are very simple and you can get them easily. Firstly, you need to have a bank account. Yes! This is one of the major requirements for investing in mutual funds. You must have a bank account though most likely you have one. Plus, you will have to be KYC compliant. KYC or Know Your Customer form can easily be filled be up with your Aadhar number and few other documents. Then you can submit it online or manually to the concerned officials. Lastly, you must have Permanent Account Number or PAN. Well, anyone who incomes legally and is a taxpayer has a PAN number so this is something that you already have. But in any case, if you don’t have the PAN details then do fill up your PAN card application online by filling the form number 14a of the Income Tax department.

  • Choose the right funds:

“Wait! What are you talking about”? Isn’t it what you are thinking in your mind? Well, let us explain it to you. Unlike the other investment options, in mutual funds, you need to invest your money in the portfolio. Here, comes another jargon! Well, the portfolio is basically a plan for asset allocation which you need to build as per your risk appetite and the investments you make will be guided by this portfolio. Now, once you invest your money in your portfolio, you will be given the option to choose the right funds. Yes! You will have to allocate your investment onto these funds as per your risk profile. What are the fund options available? There are quite a few fund options available like money market, debt, equity share, securities etc. Once you have allocated your money to these funds, you will have to choose the plan. You can choose to take the direct plan or the regular plan. The direct plan seems to be much more convenient since it deducts a very nominal charge and provides you with the power to manage your investments as per your will. Lastly, choose whether you want your returns in the form of the dividends or you want it compound freely and collect it as lump sum money.

Note: It is always best to go for the growth option since it allows your fund to compound and it is also much more advantageous than the dividends.

  • Buying the funds:

Once you are done with all these, you can choose to buy your fund. You can buy or invest in the funds directly through cheques or you can just take the aid of an intermediary. If you choose to invest with the help of an intermediary then build a proper Systematic Invest Plan or SIP to track, monitor and manage your investments.

  • Selling the funds:

Well, you can sell the funds whenever you want but you need to follow a strategy. Actually, you have two options available. You can either choose to sell your funds when the market is poor or you can choose to sell your fund when you have met your financial goal.

Choose wisely and make informed decisions to help your funds grow exponentially!