All you need to know about Mutual Fund Investments

Affordability: You can invest as low as INR 500 to start a systematic investment plan. This makes it an affordable option for most individuals.

Diversification: An important rule of investing is diversification, which is an inherent feature of mutual funds. The money is invested in different asset classes across industries and companies, which mitigates the investment risk.

Liquidity: Investors can buy and sell units on any working day without any limitations at the prevailing net asset value (NAV). Therefore, you have complete flexibility to invest and withdraw funds as per your requirements.

Professional management: You may not have the experience, expertise, or time to undertake extensive research. Mutual funds are managed by experienced fund managers supported by a team of research analysts who evaluate and analyze various options and monitor performance to make the necessary investment decisions.

How do Mutual Funds Work?

Investors can purchase units in a particular scheme, which represents their holding. These units can be bought or sold at the NAV, which changes based on the modifications in the prices of the underlying securities.

The fund corpus is invested in different asset classes, such as equities, fixed-income securities, money market instruments, and others. The prices of these securities change based on the market conditions, which impacts the fund’s NAV. The NAV is reported daily after adjusting for all the expenses and permissible charges.

How to buy and sell mutual funds?

You can invest in a particular scheme directly from the AMC via its website. Alternatively, you may use the services of a registered distributor. The former option is known as direct investments and does not levy any additional fees or charges.

If you invest through a registered distributor, you may have to pay their charges. However, the distributors can provide the best option based on your requirements, investment goals, and horizon. This is an advantage as you may not have the expertise and the bandwidth to do your research to find the most appropriate options from the plethora of schemes that are currently available.

India ranks amongst the countries with the highest saving rates, which encourages Indian investors look for options that offer long-term wealth creation. A larger number of investors are moving towards mutual fund investments beyond the traditional options of bank fixed deposits, gold, and real estate. Unfortunately, the lack of awareness continues to limit the shift from traditional investments to mutual funds.

We at SRH Wealth Management are working towards bringing in greater awareness amongst investors. Our team of experienced experts understand your profile and determine your investment objectives, holding period, and risk appetite to offer the best solutions that minimize risk and maximize wealth creation in the long term.