In this era, earning money from your principal source of income is insufficient; you must also invest. People work hard to acquire money, but it may not be sufficient to live comfortably and achieve future ambitions. To achieve your goals, you must also make regular investments and build wealth for yourself. This is the key justification for investing. Having idle funds in your bank account or locker is a missed opportunity. You should invest your money wisely in order to generate returns.
Investing is necessary to reach your objectives in life. It is the only way to improve your financial future. By making investments, you are also saving and building an emergency fund. In addition, making regular investments compels you to set aside money on a regular basis, thus instilling a feeling of financial discipline over time.
Why Should You Invest In Mutual Funds?
1. Dedicated Fund Managers
Your investments in mutual funds are managed by a professional fund manager supported by a group of researchers. The fund manager formulates the asset allocation investment plan. The research team selects appropriate securities based on the investment objectives of the fund.
2. Tax Saving
Certain financial instruments, including tax-saving mutual funds, are eligible for tax deductions under Section 80C of the IT Act, up to a maximum of Rs 1.5 lakh each financial year. In recent years, the Equity Linked Savings Scheme (ELSS) has become a popular tax-saving option for Indians due to its good historical returns and the shortest lock-in period of three years among other Section 80C options.
3. Minimum Investment
You can develop a diversified portfolio of mutual funds by investing as little as Rs 500 per month via SIP in mutual fund schemes of your choosing. You may also invest as a lump sum or through a systematic investing plan (SIP). However, compared to lump-sum investments, SIPs are capable of reducing total investment costs over a long period of time.
4. Ease of Investment
Mutual fund investing is a paperless and uncomplicated process. Investors can monitor the market and invest according to their needs. In addition, rotating between mutual fund schemes and rebalancing portfolios assists maintain returns in line with expectations.
Click here to compare and explore various direct mutual funds schemes on Kuvera.
How To Invest In Mutual Funds?
1. Set An Investment Objective
Defining your financial objectives, budget, and time horizon has a substantial impact on your investments. This will help you determine how much you can set away for investments, and you must also invest in accordance with your risk profile. Investment is usually most effective when undertaken with a specific goal in mind.
2. Select a Fund Type.
Reading about the many types of mutual funds is insufficient for choosing the correct category. First-time investors are often advised to invest in a balanced or debt fund, as they are associated with low risk and provide stable returns.
3. Identify and Select One Mutual fund
With a variety of mutual fund plans in each category, it is necessary to analyze and evaluate them to select the most suitable investment. The credentials of the fund manager, the expense ratio, the portfolio components, and the assets under management should not be ignored by investors.
4. Diversify Your Holdings
Consider investing in multiple mutual funds for portfolio diversification and risk-adjusted returns. A fund portfolio will enable you to diversify across asset classes and investing strategies. It will also mitigate risks – when one mutual fund underperforms, the other funds will compensate for the loss, maintaining the portfolio’s value.
5. Choose SIPs Over Lump-Sum Investments
The use of systematic investment plans (SIP) is recommended for first-time investors in equity instruments. A lump sum investment exposes you to the risk of investing at the market’s high, whereas SIP allows you to invest across market levels and over time. Rupee cost averaging, a feature of SIPs, enables you to average out the cost of your investment and achieve greater profits over the long term.
Invest In Mutual Fund Online
Through Kuvera, you can invest in direct mutual funds without paying commissions. It is the perfect platform for investing in mutual funds because it is completely free and assists you in locating the ideal investment for your life goals.
To invest in mutual funds with Kuvera, complete the procedures below:
1. First, register at Kuvera Website.
2. Complete the KYC procedures and link your bank account in the second step.
3. Click MF in the Explore section to select investing mutual funds.
4. Select the mutual fund and make the transaction.
To invest in top mutual funds from your smartphone click here to download Kuvera mutual funds investment app.
Top 10 Performing Equity Large Cap Mutual Funds (as per 5-Year Return)
|1. Canara Robeco Bluechip Equity Fund||14.25%||7,314.35|
|2. Axis Bluechip Fund||13.80%||34,106.21|
|3. Kotak Bluechip Fund||12.28%||4,537.26|
|4. Mirae Asset Large Cap Fund||12.28%||31,760.41|
|5. Edelweiss Large Cap Fund||12.26%||329.35|
|6. Sundaram Large Cap Fund||12.08%||2,966.57|
|7. UTI Mastershare Fund||12.06%||9,815.46|
|8. ICICI Prudential Bluechip Fund||11.95%||31,522.90|
|9. Invesco India Largecap Fund||11.85%||663.13|
|10. Baroda BNP Paribas Large Cap Fund||11.72%||1,285.89|
Source: AMFI (data as on 20/07/2022)