Documents Required for Mutual Fund:
Identity Proof:
- Aadhaar card
- Pan Card
- Cancel Cheque
A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. A mutual fund is an investment fund that pools money from many investors to purchase securities.
What is a Mutual Fund?
Mutual funds are often classified by their principal investments: money market funds, bond or fixed income funds, stock or equity funds, or hybrid funds. Funds may also be categorized as index funds, which are passively managed funds that track the performance of an index, such as a stock market index or bond market index, or actively managed funds, which seek to outperform stock market indices but generally charge higher fees. The primary structures of mutual funds are open-end funds, closed-end funds, and unit investment trusts. Over long duration passively managed funds consistently over perform actively managed funds.
Advantages of Mutual Fund:-
- Increased opportunity for diversification: A fund diversifies by holding many securities. This diversification decreases risk.
- Daily liquidity: In the India, mutual fund shares can be redeemed for their net asset value within seven days, but in practice the redemption is often much quicker. This liquidity can create asset–liability mismatch which poses challenges, which in part motivated an SEC liquidity management rule in 2016.[24]
- Professional investment management: Open-and closed-end funds hire portfolio managers to supervise the fund's investments.
- Ability to participate in investments that may be available only to larger investors. For example, individual investors often find it difficult to invest directly in foreign markets.
- Service and convenience: Funds often provide services such as check writing.
- Government oversight: Mutual funds are regulated by a governmental body
- Transparency and ease of comparison: All mutual funds are required to report the same information to investors, which makes them easier to compare to each other.
Types of Mutual Funds:-
There are many types among the more than 7,000 mutual funds in the India., with most in four main categories:
- Stock Funds
- Money market Funds
- Bond Funds
- Income funds , etc.
How to Invest in Mutual Funds:-
Investing in mutual funds is relatively straightforward and involves the following steps:
- Before buying shares, you should check with your employer if they offer additional mutual fund products since these might come with matching funds or are more beneficial tax-wise.
- Ensure you have a brokerage account with enough deposits and access to buy mutual fund shares.
- Identify mutual funds matching your investing goals for risk, returns, fees, and minimum investments. Many platforms offer fund screening and research tools.
- Determine how much you want to invest and submit your trade. If you choose, you can likely set up automatic recurring investments as desired.
- While these investments are most often for the long term, you should still check on how the fund is doing periodically, making adjustments as needed.
- When it’s time to close your position, enter a sell order on your platform.
