A Beginner Guide to Investing in Mutual Funds in India

Investment in the future fund is one of the most feasible ways to create wealth. It is the most favorite way for beginners as it gives them exposure to financial markets. If you aim to invest in mutual funds in India, be prepares with necessary documents, knowing the purpose of investment, choosing the right mutual fund scheme, etc.

As a beginner, you need to know some more things to make an informed decision.

Know your purpose

First and the foremost thing is to know the purpose of investment. Make why you are doing mutual fund research for the investment; it is to buy a car, plan for child education, buy a home, plan for a wedding, etc. It should be well defined. Even if you have no goal, be clear how much wealth you want to create in a particular time.

Do remember to decide your primary purpose of saving and when you would need your money back. This will allow you to filter several mutual fund options, such as :

  • Risk level
  • Lock-in period
  • Payment method, etc.

Keep documents ready

Keep all required documents handy. Every transaction you make should be well documented and stored. It is important to first become KYC compliant. For this, you need to submit documents like address proof, photograph, PAN card, date of birth certificate. You should also fill in the form of respective schemes of mutual funds online in India you want to invest. You are only eligible for mutual funds when you hold a PAN card. If you have an Aadhaar card, you can make folio creation/account an easy process.

Consider Risk factor 

For a beginner, considering risk factors is always a significant fact. It is important to know that different types of mutual funds are available in India based on creating your risk appetite. You should choose the scheme as per your risk-taking capacity. Keep in mind that with higher return expectations come higher associated risks.

Think about your disclosure to equities simply and easily. If you are uncomfortable with the value of your equity investment failing, then you should be in equities at all.

Select Schemes

Planning for long-term investment is always a good idea. It is advisable to take the help of a qualified mutual fund advisor. Experts can help you by telling all the schemes, such as:

  • Liquid, Debt, Hybrid or Equity option
  • Growth, Dividend Payout or reinvestment strategy
  • SIP, Lumpsum, STP, SWP, etc.

Select while the option

When you define the purpose of your financial goal, select options, like Dividend and Growth. Opt for a growth option if you want to achieve your goal where you need a vast capita. And select dividend option if you need some profits from time to time and when a company gains from the market, you should select the dividend option.

Remember that there are many mutual funds in India that distribute their profits to shareholders in the form of dividends while others choose to use to their benefits and reinvest in the growth of the company.

Have a balanced portfolio

It is also good to check the balance, according to your age. Keep in mind that there are not any fixed rules that you can follow to have a balanced portfolio. It is good to lessen your exposure to the stocks to preserve your socks.

As a rule, it is good to substrate your age from 110 for finding the percentage of your portfolio that should be in stocks. You can also adjust this up or down based on your individuals.

Mutual Fund Rates

Try to know the rates of mutual funds.  There are many online websites where you can find correct mutual fund rates. When you come to know about the prices of future funds, you can decide your budget.


These are some of the beginner guides to choosing mutual funds online in India. Practice these guides, and you will be able to select the right mutual fund investment plan online in India.

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