KNOWLEDGE CENTRE Mutual Fund Basics / How To Invest In Mutual Funds In India?
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How To Invest In Mutual Funds In India?


How to invest money in mutual funds?

Mutual Funds Investment: Overview

Investing in mutual funds has become popular choice in the past few months. As the investment is done in several sectors at the same time, one bad performing sector can be compensated with a better performing sector. There was a time when the answer to how to invest in mutual funds was simple, but now it has become complex with many additional factors.

How to invest money in mutual funds?

One should follow the following steps to invest in mutual funds in India:

  1. Get your KYC (Know Your Customer) verified. The forms are available in all the fund offices. The KYC form takes a few days to verify.
  2. Contact your advisor and fill the form of mutual fund. The form can be downloaded from http://www.amfiindia.com/know-your-customer.
  3. After the KYC is verified, you can start investing in mutual funds. It can also be used for other investments also. Hence, one does not have to fill many KYC forms.
  4. A person can invest in SIP (Systematic Investment Plan) or lump sum amount.

Why Invest in Mutual Fund?

Mutual funds no doubt perform better and give better returns than the saving bank account. The money deposited in the bank could give a certain value after a number of years. But with mutual fund, it is not so. An investor can invest for better returns but at the same time should be aware of the mutual fund value from time to time.

How to invest in mutual funds offline?

Once the paperwork gets completed, the investor can use the services of a financial company or a bank to start investment. A person can also walk into the office of Mutual Fund Company or the office of Registrar & Transfer Agents.

The investor should carry the filled application form, KYC number, and payment instrument. This could be either cheque or demand draft. The mutual fund company will then allot a folio number which is the account number held by the investor.

How to invest in mutual funds online?

The KYC formalities should be completed before investing in mutual funds. Before investing, the investor should know that not all mutual funds allow investors to invest online. To invest online, the client should visit the website of the mutual fund company and complete the registration online. Once the application is completed, you will be allotted a login name and password through which transactions can be done.

Most of us are not qualified to apply all kinds of theories for portfolio structure to reduce the level of risk. Hence, we would be better off with a fund manager who understands the nuances of investment.

Costs associated when investing in mutual funds

The fund value is calculated on the NAV- Net Asset Value of your fund at the end of the day by the Asset Management Company (AMC). They charge an annual fee to cover their salaries, brokerage, administration and advertising costs. The larger the investment, lower are the cost as per thumb rule.
The AMC might also charge loads, which are sales charges incurred by the company in the form of distribution costs. Hence, one should read everything in the portfolio before making a commitment.

Now, the biggest question, how to invest money in mutual funds online? What are the tips and tricks involved when investing in mutual funds in India? Below are some of them.

Asset Allocation

An investor should understand the kind of portfolio they need before investing in mutual funds. It should be a healthy mix of high and low risk instruments. For example, if you are 30 years old, you should have 30% of funds allocated towards debt instruments. The younger you are the more you can invest in equities and high risk funds.

Fund Types

Once the asset allocation is done, you should focus on shortlisting the types of funds you want to invest in. This should be decided on the ultimate financial goal. The more money one needs, the more risk factors should one undertake. Also, know about the time limit of investing in mutual funds and their risk profiles which depends on personal outlook.

Comparing funds

When comparing funds, look at the history of the fund by studying the pattern and checking performance online. Check out the top 5 fund in the class you wish to invest into. These points will help you make a better decision and help you define your portfolio. In general, you should think of investing in 20 different assets.

Keep in Touch

The investors should keep a track of the investments. You can keep track online, through newsletters or newspapers. Today, the mobile apps also provide all the date needed and will help you keep a track of all your investments. Angel Bee has an easy-to-understand dashboard that helps you in keeping track of your portfolio. Download the Angel Bee app to explore the smart way of investing.


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