What’s the first thought that crosses your mind when you hear the word Mutual Funds? Confusion galore? Is the concept of Mutual Funds all Greek and Latin to you? We have the answers for you! We’ll help you decode all this with our handy Beginner’s Guide to investing in Mutual Funds. Read on to find out how Mutual Funds and Systematic Investment Plans work.
Mutual Funds Simplified
Mutual Funds are a collection of stocks and bonds. Think of it as a company that consists of a group of people who invest their money in bonds, stocks and other securities.
How Mutual Funds Work
Unlike the stock market, where investors buy shares from one another, Mutual Funds are different. Mutual Funds are bought directly from the fund. As a result, Mutual Funds are redeemable and you can sell them back to the fund at any time.
How Safe Are Mutual Funds
Mutual Fund managers give you regular updates about the current value of your investments. This gives you a clear picture of how your investments are performing.Every Mutual Fund is regulated by SEBI so you can rest assured that your investments are handled safely in a regulated manner.
Confused about how to invest in Mutual Funds?
Systematic Investment Plans
Systematic Investment Plans are a method of investing a fixed sum regularly in a Mutual Fund scheme.
How Systematic Investment Plans Work
A Systematic Investment Plan allows you to buy units on a given date each month. This allows you to start a saving plan for yourself.
Starting a Systematic Investment Plan
You can invest a fixed amount in a scheme every month or on a quarterly basis in two ways:
- Through post-dated cheques
- Through ECS auto-debit facility
Starting a Systematic Investment Plan is easy.
- Fill out an Application Form and an SIP Mandate Form.
- On the SIP Mandate Form, you need to indicate your choice for the date of the investment.
- Your subsequent SIPs can be auto-debited by issuing standing instructions or through post-dated cheques.
See Your Money Grow With Systematic Investment Plans
Systematic Investment Plans are a great way to build wealth. In a Systematic Investment Plan, your money grows over time. Your actual investment including returns over time gets compounded over a period of years and grows into a large sum in the long term.
Start planning your investments early and reap the benefits. There’s never a better time than NOW.
Still not convinced about investing in Mutual Funds?