Creating Wealth through Mutual Funds

One of the profitable and low-risk investment schemes in the market, mutual funds help the investors in securing their future through appreciation of their savings. Mutual funds offer the investors an opportunity to invest in a judicious portfolio of stocks, bonds and other securities managed by expert asset management companies. 

Be it planning for retirement or, simply wealth creation, mutual funds are one of the best investment tools. 

But how to invest in a mutual fund for beginners remains a daunting question. It is since not all the mutual funds yield profit, it is advisable to consult an efficient financial advisor who can understand your specific requirements and advise you to invest in your best interest. 

1. Be KYC compliant: Before beginning to invest into mutual funds, the first requirement for the investor is to become “KYC compliant”. For this, it is required to submit proofs of address, date of birth and PAN card.

2. Create a portfolio: On the basis of your requirements, it is important to shortlist a portfolio of a few mutual funds which have shown a credible performance record in the past. If you are residing in the national Capital, a trusted financial advisor in Delhi may help you in this regard. Financial advisors remain focussed on studying daily ups and downs of stock markets and simultaneously also maintain the track record of different mutual funds. They can very well advise you to pick the best ones to invest among the large bouquet of available mutual funds.

3. Go for SIP: As soon as the portfolio of mutual funds is finalised, the best way to start investing in mutual funds is to do so with systematic investment plans (SIP). Now decide how much you want to invest through SIP that safeguards you against the fluctuations in stock market. 

4. Compare the mutual funds: The investors should be aware that each mutual fund is different from the other and so they should make a careful comparison based on its market performance and past records of other mutual funds which may be based on equity, hybrid or debt, before investing. They should analyze the risk factors and profit ratio of a particular mutual fund with the help of a professional financial advisor before starting to invest into it.  

Planning your taxes is an integral part of your financial planning. Sec 80C of the Income Tax Act allows you to claim deductions from your taxable income by investing in certain investments. One of the most popular Sec 80C investments is in tax saving mutual funds or Equity Linked Savings Scheme (ELSS).

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