Nowadays everyone wants to invest in mutual fund because through this you can increase your money. Compared to the stock market, mutual funds are much less risky and they give you very good returns on your investment every year.
If you want to multiply your money quickly, then investing in mutual funds is a very good way. If you want, you can also do SIP in mutual funds in which you have to deposit a certain amount every month and after a few years you get compounded returns on that money. When we think of investing money in mutual funds for the first time, the first question that comes to our mind is what is the method of investing money in mutual funds?
How to invest in mutual fund?
To invest in mutual fund, you need three things: a demat account, a trading account and a bank account. When you have these three accounts, you can easily invest money in mutual funds.
Below we have given some simple steps through which you can easily invest in mutual funds, let’s know.
(1) First of all open a demat account
The first step to investing money in mutual funds is to open a demat account. For this, you have to choose a reliable broker who has been working in the market for a long time. The names of some reliable brokers are given below in which you can open your demat account and start investing online in mutual funds.
(1) Angel Broking
(2) Upstox
(3) Zerodha
(4) Groww
You can easily invest money in mutual funds by opening your demat account with any of the brokers given above.
To make your work easier, I recommend you to open an Upstox demat account because it is India’s most trusted broker in which Ratan Tata himself has invested. Through this, you can invest money not only in mutual funds but also in the stock market.
(2) Select the right mutual fund
After opening a demat account, you have to log in to the broker app using your login details. Now in this step you have to select a good mutual fund which can give better returns on your investment.
- To invest in mutual funds, go to your broker app and click on ‘Mutual fund’.
- Now you will see mutual funds of different categories like; Top Rated, High Return, Low Risk etc.
- Out of these, you have to select any one fund as per your choice.
- Apart from this, you can also search by entering the name of a particular mutual fund.
- For example – ‘Parag Parikh flexi cap fund’ is a very popular mutual fund that invests in both small cap and large cap.
- To know more about this fund, you can click on it and see its details on the next page.
- On the next page, you have to see the ‘Ratings’ of that mutual fund, which companies have given how much rating to that fund.
- After this, check the returns of that mutual fund for the last 3 to 5 years. Invest money only if the annual return is around 12% or more.
- Now look at the lock in period of that fund. This tells you after how much time you can withdraw your money from that mutual fund.
(3) Check the holdings of the mutual fund manager
Once you have chosen a good mutual fund, now you have to check the holdings of that fund. Holdings means where the fund invests the investors’ money.
If a mutual fund invests your money in growth companies, it means that your money will also grow rapidly in the future.
But on the contrary, if a fund invests your money in companies that are not even able to earn profit, then you should not invest money in such a mutual fund.
(4) Select the time period for investing in mutual funds
Once you have selected the right mutual fund and found out about its holdings and fund manager, now you have to select the ‘Time period’ for which you want to invest your money in that mutual fund.
You can select any time period as per your requirement like – 1 year, 3 years, 5 years, 10 years etc.
- If you want to invest in mutual funds for a long term, then select a ‘time period’ of 5 to 10 years or more. This will give you tremendous benefits in the future.
- But if you want to invest in mutual funds for a short period of time, then you can invest money in mutual funds for 1 year or even 6 months.
(5)Enter the amount you want to invest
Now you just have to enter the amount you want to invest in mutual funds. For this you have to select either SIP or Lumpsum.
- If you want to invest a fixed amount in mutual funds every month or every week, then click on SIP.
- If you want, you can start SIP in mutual funds with just Rs 100.
- This way, your Rs 100 will be invested in mutual funds every month or every week directly from your bank account and your investment will keep growing.
- On the same screen, you will see a mutual fund calculator at the bottom in which you will see the estimated return according to your time period.
(6) Click on the Invest button to invest money
The last step to invest in mutual fund is to make payment through your bank account.
- When you know all the details of the fund, now you have to click on the ‘Invest’ button.
- On clicking, you will reach the next page where you have to select any one payment option from UPI, Net Banking or Debit card and make the payment from there.
- If you have selected ‘lumpsum’ then your money will be deducted in one go and if you have selected ‘SIP’ then your money will be automatically deducted from your bank account every week or every month and will keep getting invested in mutual funds.
I hope you have now understood how to invest in mutual funds.
Know – How to invest in SIP?
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