How to invest in Mutual Funds in 7 easy ways

Mutual Funds are investment vehicles that pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. By investing in Mutual Funds, you can spread your investments across different assets, reducing the risk associated with putting your money in one place.

This diversification helps mitigate potential losses while still offering the opportunity for returns. Whether someone is new to investing or experienced, Mutual Funds provide a convenient and efficient way to achieve portfolio diversification and potentially earn profits.

Try investing in Mutual Funds through Axis Bank! You can start with a small amount that fits your pocket. Axis Bank provides all the tools you need to keep an eye on your investments and make smart decisions.

Benefits of investing in Mutual Funds

Wide range of options: Mutual Funds offer the option to invest in multiple asset classes such as equity and debt, serving different risk tolerance capacities and investment goals.
Convenient access: Investing in Mutual Funds conveniently through online platforms offers an easy and hassle-free process of managing accounts and carrying out transactions.
Expert guidance: You will get assistance from expert fund managers who manage the assets pooled from multiple investors and invest based on market conditions and each fund’s specific investment objective.
Tax-saving options: Invest in tax-saving Mutual Fund schemes such as Equity Linked Savings Schemes (ELSS) to optimise tax liabilities while growing wealth.
Monitor your investments: Stay informed about everything related to your investments with various tracking tools and regular account statements.
Growth potential: Mutual funds can help grow and build a healthy and diversified investment portfolio that can be customised based on your several goals and risk profile.

How to invest in Mutual Funds in India?

Investing in Mutual Funds in India offers a wide range of opportunities for individuals looking to build their wealth. It's important to understand the different methods through which you can invest in Mutual Funds:

• Mutual Fund distributors

Mutual Fund distributors are authorised intermediaries who provide expert assistance and guidance in choosing the best Mutual Funds suitable for your personal investment goals, risk tolerance capacity, and financial condition. They provide tailored advice, making it easier for you to kick-start your investment journey.

• Direct investment with an AMC

You can directly invest with an Asset Management Company (AMC). This method will allow you to invest directly with the fund house. By investing directly, you can save on various charges associated with distribution fees, etc. Many AMCs provide online platforms where you can open accounts, check for various funds, manage transactions, and make investments.

• Registered investment advisors (RIA)

RIAs provide personalised investment advice to cater to the particular needs of investors. They assess various factors like financial condition, risk tolerance capacity, and investment goals to make customised investment plans. RIAs offer unbiased advice and suggestions helping investors make wise decisions about their Mutual Fund investments.

• Online Mutual Fund investment

Online platforms have transformed the way you can access and invest in Mutual Funds these days. These platforms come with a user-friendly interface. You can easily explore various Mutual Fund options, compare performance metrics, and make investments from your mobile phone or desktop. Online investing provides flexibility and convenience to manage funds anytime and anywhere.

• Utilise registrars and transfer agents (RTAs)

RTAs provides administrative support for Mutual Fund transactions. They assist in tasks like updating personal details, managing transactions, and providing account statements. RTAs play an important role in making sure you have smooth and seamless processing of MF transactions.

• Invest through stockbrokers

Stockbroking firms provide with a single platform to manage both equity and Mutual Fund investments. Stockbrokers also have various analytical tools to help you make informed investment decisions.

• Bank-enabled Mutual Fund investment

Online banking platforms allow investors to seamlessly integrate Mutual Fund investments with other banking activities. Axis Bank provides accessibility and convenience, enabling you to manage your investments easily. Bank-enabled Mutual Fund investment streamlines the process, providing accessibility, convenience, and integration with banking activities. It's an attractive option for investors looking to build and manage their investment portfolios.

How to invest in Mutual Funds based on asset classes?

1. Equity Mutual Funds

Equity Mutual Funds invest more than 60% of their assets in the stocks of listed companies
Equity Mutual Funds can be broadly segregated into: (1) funds based on market capitalisation such as large-cap, mid-cap, small-cap, or multi-cap funds, which invest in companies of varying market capitalisation, (2) funds based on sectors such as pharma, Information Technology, banking, auto, FMCG, etc, or diversified funds, which invest in companies of various sectors
These funds are perfect for investors who have a higher risk appetite and for those looking for capital appreciation over the long term
Since returns from equity Mutual Funds tend to be volatile in the short term, but they have the potential to offer inflation-beating returns over the long term
Ideally, you should stay invested for 5 years or more to get meaningful returns from equity Mutual Funds

2. Debt Mutual Funds

Debt Mutual Funds invest in fixed-income securities like government bonds, corporate bonds, and money market instruments.
They offer a variety of options, such as, Liquid Mutual Funds, Short-term Debt Funds, Long-term Debt Funds and Corporate Bond Funds catering to different investment objectives and risk tolerance capacities
Returns from Debt Mutual Funds tend to be lower than, but less volatile as compared to returns from equity Mutual Funds
These are ideal for investors looking for stable returns in the short-term to medium-term , i.e. up to five years, and for investors with lower risk appetite

3. Hybrid Mutual Funds

Hybrid Mutual Funds invest in a mix of equity and debt instruments, providing a balanced approach to investing.
These funds’ main objective is to grow your investment while also providing regular income by spreading across different types of assets.
Hybrid Mutual Funds are ideal for investors looking for a combination of growth and stability in their investment portfolio.

How to invest in Mutual Funds for tax-saving purposes?

Equity Linked Savings Schemes are Mutual Funds that allow you to save tax under Section 80C of the Income Tax Act. ELSS Funds invest in equity, offering the benefits of both capital appreciation and tax savings. You can claim tax deductions of up to ₹1.5 lakh annually by investing in ELSS Mutual Funds, making them an ideal choice for tax planning. They have a lock-in period of three years, which is lower than most other tax-saving instruments.

How to invest in Mutual Funds through SIP?

Systematic Investment Plans allow you to invest small amounts every month in the Mutual Fund scheme of your choice. This ensures disciplined investment, without undue pressure on your monthly budget.

Whether you are investing through an independent Mutual Fund platform, a bank-led Mutual Fund investment platform, a Mutual Fund distributor, or directly via the Asset Management Company, SIP is an easy way to invest in Mutual Funds.

By investing via SIP you are effectively investing in the market at different price levels. With each monthly installment, the MF units are added to your account, ensuring that your cost of investment is averaged out. This is the benefit of rupee cost averaging.

Also, the automated nature of investing via SIPs, makes it easy for you to manage your investment. Once the SIP is set up, the amount gets deducted from your bank account every month, and Mutual Fund units are purchased in your name.

Cost of investment associated with Mutual Funds

Investing in Mutual Funds incurs various costs and fees, like -

Entry load: Charged at the time of investment.
Exit load: Applied upon redeeming units prematurely.
Expense ratio: Represents the annual fee for managing investments.
Transaction fees: Incurred for buying or selling units.

Carefully consider these costs to assess their impact on overall returns on investment

Also Read: Deciphering Mutual Fund risk levels with the risk-o-meter

FAQs

How to check Mutual Fund status?

To check the status of your Mutual Fund, log in to your MF account and view your investment details, transaction history, and current fund status.

How to check Mutual Fund status with folio number?

You can check the status of your Mutual Fund using the folio number provided by your distributor or the AMC. Log in to the website or mobile app, enter your folio number, and access your investment details, including transaction history and current status.

How to add nominees in Mutual Funds online?

If you have invested through Axis Bank, then log in to your Mutual Fund account on the Axis Bank website or mobile app. Go to the nominee section, fill in the necessary details, and submit the nominee's information electronically.

Is a Demat account required for Mutual Funds?

No, a Demat account is not required for investing in Mutual Funds. Mutual Fund units are held in electronic form by the registrar and transfer agents (RTA) or the AMC.

How do I know if my Mutual Fund is holding?

You can know the performance of your Mutual Fund by checking the Net Asset Value, comparing the returns of your fund with its benchmark as well as peer group funds, checking the past history of the fund, and so on.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.

Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. T&C apply.