Understand the steps to invest in a mutual fund
"Planning is bringing the future into the present, so you can do something about it now!" — Alan Lakein (American Author)
'Financial planning' is more than a buzzword for people today. It is about having a financial safety net when times get tough and a pathway to a good life. One such path to explore is mutual fund investments. So what are mutual funds, and how can you buy them? Let's read on to find out.
Mutual Funds are a type of investment where multiple people pool their money to purchase units of a particular asset. This article will highlight the benefits, along with an outline of how to purchase mutual funds.
If the world of investments, people consider mutual funds one of the best ways to achieve steady financial growth. Let us look at more benefits:
Mutual funds inherently offer diversification. Instead of investing in just one stock or bond and running the risk of it not performing well, a mutual fund invests in a portfolio of securities to reduce risk and maximise returns.
A qualified fund manager tracks market news to re-align your fund portfolio based on their judgment and expertise. All you have to do is sit back, relax, and check how your investment is doing.
Need cash urgently? You can easily exit a mutual fund by selling or redeeming your holdings once the fund house has released the Net Asset Value (NAV) for the day. You will have to consider the charges (known as an exit load). A good tip here is to redeem only a part of the portfolio value based on how much money you need.
The Security and Exchange Board of India (SEBI) keeps a keen eye on mutual funds schemes. Every issuing bank or fund house must provide a prospectus which has scheme-related information. A few essential components of a mutual fund to look for are the NAV, types of securities in the portfolio, the fund's performance, and expected returns.
Whether you have Rs. 500 to invest or Rs. 50,000 a mutual fund doesn't limit you. You can even choose to invest a lump sum amount or take the Systematic Investment Plan (SIP) route. In an SIP, you can contribute a certain amount at regular intervals.
If investing in a mutual fund sounds like a good idea, you may also want to know how to buy mutual funds.
It is comparatively simple to buy mutual funds online. Before you invest in them, you will need to be KYC (Know Your Customer) compliant. A one-time task, a KYC, is mandated by the SEBI to prevent fraud. Let's delineate the steps required to get your KYC:
Once you are KYC compliant, you can start investing in mutual funds. You can find out from your bank's website they can assist you in completing your mutual funds KYC.
When filling out your online mutual funds' forms, you have to follow instructions correctly. Your bank or AMC may request for these details:
You can fill out a mutual fund form offline as well; however, It's easy to keep track of your investments when you purchase them online. You can view all your schemes in one app.
You are now well-versed with the benefits offered by mutual funds and how to buy them online.
Are you interested in securing your financial future? If yes, then download the digibank by DBS app and start investing in mutual funds. You can choose from over 200 of the top-rated schemes*.
*Rated by Morningstar - one of India's top financial research organisations.
*Disclaimer: digibank offers Mutual Funds that are instant, paperless, signatureless – even transaction fee-less! What’s more? You get to choose from 250+ Mutual Funds across 15 top-performing asset management companies. So why wait? Login to digibank (app or internet banking) and start investing in a flash with instant Mutual Funds on digibank.
Read up more on Mutual Funds here.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing.