Mutual funds are fast catching pace as an alternative investment instrument for Indian investors. From an AUM (Asset Under Management) of INR 6.42 lakh crore in September 2011 to INR 36.74 lakh crore in September 2021, mutual funds in India have come a long way.
If you have never invested in mutual funds before, this article is for you. The following sections will simplify your task of finding the best mutual fund online to give you the right thrust into the world of never-seen-before returns.
Mutual Funds - An Introduction
The concept of mutual funds is simple - multiple investors give money to an AMC or Asset Management Company that invests the fund AUM in equity, debt, or commodities. Equity-focused funds invest in stocks across market capitalizations (small, mid, or large). Debt-oriented funds invest in sovereign and corporate bonds, debentures, and money market instruments like Treasury Bills. Alternatively, some funds only invest in commodities like gold or silver.
Equity mutual funds are usually riskier than debt fund. However, if you can time your entry correctly and pick the best fund(s), earning high returns is easy. In contrast, debt funds suit conservative investors more since these funds are much less volatile than equity funds.
What Are the Benefits of Mutual Funds?
Ranging from a low investment amount, easy account opening, and professional money management to tax saving, mutual funds in India provide several unparalleled benefits. Here are the top benefits of investing in mutual funds:
- Easy-on-the-Wallet Investment Amount
You can start your mutual fund journey with a paltry amount of INR 500/- by opening a SIP (Systematic Investment Plan) account. However, if you want to invest a lump sum, the minimum amount must be INR 5,000/-.
- Straightforward Account Opening
AMCs provide detailed websites to help you find all information about top-class mutual funds online across categories like equity, debt, hybrid, and International Fund of Funds. You can also check the past performance and factsheet of the scheme before investing.
- Professional Money Management
Mutual fund managers are experts in their trade. Besides relevant education, they usually possess many years of experience in managing people's money. Mutual fund investments allow you to utilize their expertise to your advantage.
Some mutual funds, such as the Equity-Linked Saving Scheme or ELSS, allow you to reduce your tax liability by investing up to INR 1.5 lakh a year. However, these funds come with a lock-in period of three years.
How to Invest in Mutual Funds
Investing in a high-quality mutual fund is a seven-step process.
Step-1: Visit the AMC website and locate the 'Invest Now' tab.
Step-2: Click on the 'Invest Now' tab and enter your Permanent Account Number or PAN, email id, and mobile number.
Step-3: You will get a One-Time Password or OTP on your mobile phone and email. After receiving it, enter the OTP in the box provided.
Step-4: Answer some questions about your account, such as gender, category, income slab, nominee, etc., and hit the 'Save and Proceed' tab.
Step-5: Choose the investment type, category, scheme, option, and investment amount and click the 'Save and Proceed' button.
Step-6: Enter your bank details, including account number, IFSC, Branch Name, and Address.
Step-7: Pay money directly from your account to create a mutual fund account online.
Your Search for the Best Mutual Fund Online Ends Here!
It is crucial to decide the purpose of your investment before investing.
Are you investing to fulfill a goal like higher education or marriage? If yes, equity funds might suit you more. But, ensure to keep an investment horizon of five years or more to minimize the chances of capital loss.
However, if you want to get a regular income from your mutual fund investments or invest your retirement corpus, less-volatile debt funds may provide you with the returns you need.
PGIM India mutual fund, a wholly-owned subsidiary of Prudential Financial Inc. (USA), has a legacy of over 140 years in managing money successfully. They offer the best-performing funds across categories like equity, debt, hybrid funds, and International Fund of Funds. Click here to check the performance and investment philosophy of mutual funds to make the right decision for your money and future.