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How to Invest in Mutual Funds: A Comprehensive Guide

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Mutual funds are a convenient way to invest in a mix of stocks, bonds, or other assets — all managed by professionals. They can suit many types of investors, whether you are cautious, balanced, or open to more risk. In India, you can invest either online or in person.

To invest offline, fill out an application form and submit it along with a cheque or bank draft at a mutual fund branch or service centre. For online investments, visit the mutual fund’s official website or use a registered platform.

This guide covers the different ways to invest, including step-by-step help for SIPs and the process NRIs need to follow.

Steps to Invest in Mutual Funds - 5 Easy Steps

If you're wondering how to invest in mutual funds, these 5 easy steps will guide you through the process:

Step 1: Risk Profiling


Begin by assessing your risk tolerance. It's crucial to understand how much risk you're willing and able to take before making any mutual fund investments.

Step 2: Asset Allocation


Once your risk profile is clear, move on to asset allocation. This step involves dividing your money between asset classes, such as equities and debt, to balance risk and returns.

Step 3: Identify Funds


Now, identify funds that fit your asset allocation strategy. Compare mutual funds by checking their past performance, objectives and suitability for your goals.

Step 4: Choose and Apply


After researching, select the mutual fund scheme that best suits your financial plan. You can then complete the application process online through platforms like Bajaj Broking or offline.

Step 5: Diversify and Monitor


Diversifying your investments and regularly monitoring their performance is vital. Continuous follow-up helps you achieve better results while investing in mutual funds.

By following these steps, you'll be well-prepared to understand how to buy mutual funds and make informed investment decisions.

How to Invest in Mutual Funds Online? 

Learning how to invest in mutual funds online is a convenient way to start your mutual fund investments from the comfort of your home. You can do this in two main ways:

  • Through an Official AMC Website

Every Asset Management Company (AMC) offers an official website where you can create an account, select your preferred fund and complete your investment. The e-KYC process, which requires only your Aadhaar number and PAN, can be done online. After successful verification, you are ready to begin investing in mutual funds.

  • Through a Mobile App

Many AMCs and platforms like Bajaj Broking provide mobile applications, allowing you to easily manage your investments. The app lets you invest in various funds, buy or sell units, view your portfolio and track your investments in real-time.

Whether you choose an AMC website or app, both methods simplify how to buy mutual funds and provide you with the flexibility to manage your investments seamlessly.

How to Invest in Mutual Funds Through SIP?

Choose a Mutual Fund Scheme with SIP Option

Pick a mutual fund that allows investment through a Systematic Investment Plan (SIP). This method helps build your investment over time with small, regular contributions.

Decide How Much and How Often

Set an amount you are comfortable investing and choose how often you want to invest — monthly, quarterly, or at another interval.

Set Up Auto-Debit

Link your bank account and enable auto-debit. This ensures your SIP payments are made on time without needing manual transfers.

Use an SIP Calculator

An SIP calculator helps estimate how your money could grow over time. It is useful for planning your future financial goals.

Track and Review

Even though SIPs are automatic, review your investment regularly. If needed, you can change the amount or pause the SIP.

How Can NRIs Invest in Mutual Funds? 

Non-Resident Indians (NRIs) can invest in Indian mutual funds by meeting eligibility rules and completing key documentation steps. The process is regulated and slightly different from that for residents, especially regarding account types and repatriation of funds.

Open a Suitable Bank Account:

NRIs are not allowed to invest in mutual funds using a standard Indian savings account. To begin, they must open either an NRE or NRO account, depending on the source and intended use of the funds:

  • NRE Account: Suitable for transferring money earned abroad to India. The funds in this account are fully repatriable, which means they can be converted back into foreign currency and moved overseas without restrictions.
  • NRO Account: Meant for depositing income earned within India. Funds in this account are not easily repatriable and are subject to certain conversion and transfer limits. Understanding the differences between these two accounts is essential before starting your investment.

Choose Your Investment Method

NRIs can invest in mutual funds either directly or through a trusted representative:

  • Direct Investment: An NRI can invest through authorised banking and financial channels. The application must clearly state whether the investment is repatriable or non-repatriable. Required documents include a valid passport, proof of overseas address, and a recent bank statement. In some cases, in-person verification at an Indian embassy may be necessary.
  • Power of Attorney (PoA): An NRI can authorise a person in India to invest on their behalf. In such cases, both the NRI and the PoA holder are required to sign and submit the KYC documents. This method allows the authorised person to manage investments locally while still complying with regulations.

Complete KYC and Understand Regulations

Before investing, NRIs must complete the Know Your Customer (KYC) process by submitting documents such as a valid passport, proof of overseas address, and a bank statement. Some investors may be required to undergo in-person verification, depending on the fund house and their country of residence.

NRIs from Canada or the US may face extra steps due to FATCA regulations. Some mutual funds only accept offline applications from these countries. Returns are credited to NRE or NRO accounts after tax deduction or paid via cheque.

Conclusion

In conclusion, despite the variety of investment options available, mutual fund investments remain one of the most practical and effective ways to grow your wealth. One of the key benefits is that your funds are professionally managed by experienced fund managers who conduct thorough market research. Moreover, investing in mutual funds allows for portfolio diversification, reducing risk and enhancing potential returns. Whether you're learning how to invest in mutual funds or exploring how to buy mutual funds, platforms like Bajaj Broking offer the tools and guidance needed to make informed decisions and build a strong investment portfolio.

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Frequently Asked Questions

What are the basic steps to start investing in mutual funds?

Answer Field

To start investing, you should first understand how to invest in mutual funds by selecting a fund that aligns with your financial goals. Complete your KYC process and decide between a lump sum or Systematic Investment Plan (SIP) option. Many platforms allow for easy online investing.

How much money do I need to start investing in mutual funds?

Answer Field

When looking into how to invest in mutual funds, you'll find that the minimum investment amount is quite low, often starting at ₹500. This makes mutual fund investments accessible to a broad range of individuals who wish to grow their savings.

What is the difference between a lump sum and an SIP investment in mutual funds?

Answer Field

A key part of understanding how to invest in mutual funds is knowing the difference between a lump sum and a SIP. A lump sum involves a one-time investment, while SIP allows for small, regular investments over time.

How do I choose the right mutual fund for my investment goals?

Answer Field

To learn how to invest in mutual funds effectively, assess your financial goals, risk tolerance and investment horizon. Depending on whether you're aiming for wealth creation, regular income or capital preservation, different mutual funds will suit your needs.

Can I invest in mutual funds online? What are the basic steps?

Answer Field

Yes, learning how to invest in mutual funds online is straightforward. Register on a mutual fund platform, complete your KYC and choose a fund that fits your investment goals. You can then opt for either a lump sum or SIP investment method.

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Disclaimer :

The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes. The securities are quoted as an example and not as a recommendation. Past performance is not necessarily a guide to future performance.

The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.

Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.

Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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