5 Important Questions Answered for a First-Time Mutual Fund Investor
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, 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 can invest in equity mutual fund plans, as they have the potential to offer superior returns to other asset classes.
What is the minimum amount required to start investing in mutual funds?
It is important to start investing and the beauty of Investment funds is that you can get started with as little as Rs 100 per month. The mantra is “get started and stay invested for the long haul.”
If I start with 100 rupees 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 the investment more time and results in higher returns as compounding power (basically earning interest on interest) increases over time.
On the other hand, a SIP (the predetermined amount invested at a regular interval) gives you the benefit of Rupee Cost Averaging (RCA), which basically evens out 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 advisor for a 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 overall investment goals and selecting more schemes to provide a short list. The goal is to remove complexity and ensure an objective investment process. After initial account creation, investors can trade mutual funds in a few simple steps. Post-trade, the platform helps track portfolio performance with timely alerts and notifications.