If you’ve been thinking about how to start investing in mutual funds online in India, the good news is — it’s easier than ever. Whether you’re saving for the future, building wealth, or just starting your financial journey, mutual funds offer a convenient and flexible way to grow your money.
You don’t need deep stock market knowledge to begin. With the right plan and guidance, you can start mutual fund investment confidently and build long-term wealth with small, regular contributions.
What are Mutual Funds?
Mutual funds pool money from several investors and invest it across assets like equities, bonds, or money market instruments. A professional fund manager makes investment decisions to generate returns.
Since experts handle the complexities, investing in MF is one of the simplest ways to participate in the market and grow your wealth without actively trading.
Why Should You Invest in Mutual Funds?
Here’s why mutual funds continue to be one of India’s most popular investment options:
- Diversification: Mutual funds spread your investment across different assets like equity, debt and hybrid categories, reducing overall risk.
- Flexibility: You can invest as per your financial goals and risk appetite—whether through SIPs or lump sum investments.
- Liquidity: Open-ended mutual funds allow you to redeem your investment anytime, giving you easy access to funds.
- Affordability: You can start small. Most funds in India allow you to begin investing with just ₹500 through SIPs or ₹1000 in lump sum.
- Professional Management: Experienced fund managers make investment decisions, saving you time and effort.
- Tax Benefits: You can save taxes by investing in ELSS (Equity Linked Savings Schemes) under Section 80C.
- Transparency and Regulation: SEBI ensures investor protection through strict guidelines and regular disclosures.
How to Invest in Mutual Funds Online?
If you prefer a digital route, here’s how to start investing in mutual funds online easily:
- Through the AMC Website: Visit the official website of your chosen Asset Management Company. Register, complete KYC and start investing in a few clicks.
- Using AMC or Broker Apps: Download the AMC’s or distributor’s app. These apps let you start SIPs, track performance and manage investments on the go.
- Via Investment Platforms or RTAs: Use platforms like CAMS or KFintech for a quick and convenient experience. You can invest in direct plans here for lower costs.
- With Help from RIAs: Registered Investment Advisors can guide you on fund selection and goal-based investment for a nominal fee.
How to Invest in Mutual Funds Based on Asset Classes?
Mutual funds are broadly classified into equity, debt and hybrid categories. Here’s how to decide where to invest:
- Equity Mutual Funds: Ideal for long-term goals. They invest in stocks and offer higher growth potential but carry more risk.
- Debt Mutual Funds: Perfect for conservative investors. These include liquid, ultra-short duration and long-duration funds that offer stable returns with lower risk.
- Hybrid Mutual Funds: These balance equity and debt in varying proportions. Options include Balanced Advantage, Multi-Asset, Aggressive, Conservative and Arbitrage funds.
How to Invest in Mutual Funds for Tax Saving Purpose?
If you want to grow your wealth and save on taxes simultaneously, consider ELSS (Equity Linked Savings Schemes).
ELSS funds qualify for tax deductions of up to ₹1.5 lakh under Section 80C of the Income Tax Act. They have a 3-year lock-in period and offer potential for long-term growth.
How to Invest Lumpsum Amount in Mutual Funds?
Planning to invest a one-time amount? Here’s how you can approach it:
- Choose a lumpsum-friendly scheme, preferably equity or hybrid, based on your time horizon.
- Invest during market corrections or when valuations are reasonable.
- Split your lumpsum into smaller tranches using Systematic Transfer Plans (STP) to reduce market timing risk.
- Track fund performance regularly to ensure alignment with your goals.
Detailed KYC Process Before Investing in Mutual Funds
Before you begin investing in MF, completing KYC is mandatory. Here’s how to do it:
- Visit the AMC website or KYC Registration Agency (KRA).
- Submit your PAN card, address proof and photograph.
- Complete in-person verification (IPV) or video KYC.
- Once verified, your KYC status will be updated across all mutual funds.
Important Points to Keep in Mind Before Investing in Mutual Funds
To make the most of your investment journey, keep these tips in mind:
- Set Clear Goals: Decide your investment based on financial objectives like retirement, education, or a home purchase.
- Know Your Risk Appetite: Pick equity, debt, or hybrid schemes depending on how much risk you’re comfortable with.
- Understand Costs: Mutual funds charge exit loads (if withdrawn early) and management fees (TER), which affect net returns.
- Stay Invested Long-Term: Longer investment horizons help reduce volatility and compound your returns better.
- Review Periodically: Track performance every few months and rebalance your portfolio if needed.
- Avoid Emotional Decisions: Don’t redeem during short-term market fluctuations; stick to your financial plan.
Costs Associated with Mutual Funds
While investing in MF, it’s important to understand the associated charges:
- Expense Ratio (TER): This is the management fee charged by the AMC to manage your investment.
- Exit Load: Some funds charge a small fee if you redeem your investment before a specified period.
Both these charges slightly impact your overall returns, so always check them before investing.
If you need funds urgently but don’t want to redeem your investments, you can apply for a Fibe Loan Against Mutual Funds.
It’s one of the fastest ways to get liquidity without disturbing your investment portfolio. You can borrow up to ₹10 lakhs instantly and continue enjoying market growth at the same time.
FAQs on Investing in Mutual Funds
1. Where should beginners invest in mutual funds?
Beginners can start with ELSS for tax benefits or balanced funds for a mix of growth and safety.
2. Is a Demat account necessary for mutual fund investment?
No, it’s not mandatory. However, it simplifies tracking all your investments in one place.
3. How can I check the status of my mutual fund using the folio number?
You can check it via your AMC’s website, consolidated account statement, or mobile app.
4. How can I add a nominee to my mutual fund?
Log in to your online account, go to ‘Add Nominee, fill in the details and submit your request.’
