The methodology of investing in Mutual Funds

People with a moderate to large corpus of savings plan for their retirement by investing in Mutual Funds. Investing in mutual funds is an interesting mental exercise as you have to understand all the intricacies of stocks, stock markets, performances of the stocks and the accompanying risks and returns. Investors need to understand how to invest in mutual funds with the skilled advice of financial planners.

You can invest in mutual funds through an online and offline process.

Offline investments:

• These can be made through Banks where you hold an account/s
• Individual Financial Advisors (registered with the Association of Mutual Funds of India)
• Independent Mutual Fund Houses
• Independent Brokers – credited with the Stock Exchange

Prior to making investments, every investor should maintain a folder with copies of the following documents viz;

• Residential address
• Bank account details
• PAN Card
• Photographs
• KYC compliance

Online investments: The first step involves a registration process, which is common to all – Banks, Independent Fund Houses and Brokers. You download the said form (pertaining to investments), provide all personal details as requested including a cancelled cheque and your photograph and you are ready to dive into the world of mutual fund investments.

Offline investments are not very different from online investments save for the fact that you complete the process physically. Taking refuge in the advisory services of Fund Managers helps you invest your money in the most value-based companies which assure you of great returns.  Along with the Fund Manager, you can draw a parallel between the schemes being offered by the various mutual funds. You must compare the performances of the past few years, the size of the assets and even the likely returns which will accrue to you. You can also research on the amount of shares held by funds in companies, the ranking of the stocks by CRISIL and keep a vigil on the changing face of the economy.

Based on your futuristic goals you can invest in Equity Mutual Funds which are noted for yielding more than reasonable returns but only if you are ready to keep your money locked in for a couple of years. Highly risky in nature, they offer you attractive rewards in the long run.  Systematic Investment Planning (SIP) Mutual Funds are the most organized investments. They offer you a sense of security even in the times of a shaken economy because they invest your money across a range of sectors thereby minimizing the risk of loss.

There are a host of funds to choose from but how to invest in mutual funds is totally dependent on your future expectations. Fund Managers will select stocks which will help you realize your long term goals. They will also provide you with continuous updates on the stocks invested in but you must also keep a hawk’s eye on the same.

The Author is an Finance & Consulting professional with 13 years of professional experience having served in reputed organizations. Here the author explains on how to invest in Mutual Funds.