Tips for Investing in Mutual Funds for Beginners

Following are the 6 important points that beginners should consider before investing in a mutual fund scheme.

  • Tip1: Go through financial Advisor/planner to invest: An investor can choose mutual funds directly or with the help of Investment/Financial advisor or distributor. The use of “DIRECT” option to invest is never recommended for beginners. Saving the marginal cost of advisory may prove costlier later on. However, it makes perfect sense to go direct if you are well versed with the financial markets and the corpus to invest runs into multiple of crores.
  • Tip no 2. list down your financial goals: Determining your financial goal is crucial. Do this exercise before writing a cheque. Financial goals may vary from investor to investor and can be any one or more of the following:
  • .Child education

    .Retirement planning

    .Children’s marriage

    .Planning for a dream house or contingency planning or a vacation.

  • Tip no 3. Google the funds recommended by the financial advisor: It is advisable to spare few minutes to Google the funds so recommended. Spend time to do peer comparison. Check expense ratios and past returns and the ratings by various relevant financial portals viz, moneycontrol, value research online, Mutualfundsindia, Bloomberg, CRISIL, ICRA Online etc.
  • Tip no 4. Define your risk appetite: Think of your risk-taking capacity. The risk-taking abilities may vary according to age and financial position. .For example, for a person just started working at the age of 22 against a person nearing 60 the risk-taking abilities may be very different. However, if the investor of age 60 has a lot of rental income then his risk-taking appetite may be much higher. The investment needs to be coherent with your risk appetite.
  • Tip no 5. Use Systematic investment approach: A small SIP is an ideal option to start off with. The inherent mechanism of mitigating risk in a systematic investment plan is ideal for beginners. Once you learn the ropes you can go big. Thereafter, scale up your investments. Try different products including debt and balanced funds. But only when you are fully conversant with the financial markets and financial products.
  • Tip no 6. Periodically review your investments: Monitoring your investments is as important as planning them. Complete dependence on the financial advisor is not advisable. Track your investments regularly to check any variations from your set goals. Mutaulfundwala provides several options to monitor your portfolio including a mobile app and online portfolio viewer. Reviewing, choosing, building portfolios, knowledge of taxation, inflation, and much more has to be monitored and controlled. It is highly recommended that you connect with mutualfundwala and allow us hand holding to take you through this journey of wealth creation.