Investing Via Mutual Funds; For Growth

Milind, who just secured his first job in an IT firm, is eagerly waiting for his first salary to be credited in the bank account. He plans to buy a recliner for his newly rented apartment, and he thinks he deserves to have a maid to do the daily chores since he has transitioned to this new life, he should focus only on work. For his father, Milind plans to buy a new smartphone to make his life convenient.

His father calls at night and asks, ‘how was your day,’ to which Milind replies, ‘I spent my whole day thinking where to spend my first salary.’ With a mixed feeling of nervousness and pride, Milind tells father that he is going to gift him a new smartphone. Milind’s father who believes in ‘saving first’ realises that the time has come to teach his son a financial lesson.

His father taught Milind that you need to invest first towards your ‘future’ and then allocate some portion towards your ‘needs’ and then spend the rest for your ‘wants.’ Start a SIP today, he said and understand your responsibility towards your future.

For Milind, terms like SIPs, NAV, expense ratio, equity and debt sounded like a complicated affair. Milind says, I don’t have any clue where to invest, how much to invest, however I am aware that I have some financial goal which I need to achieve.

Folks, many newbies like Milind have no clue about investing in mutual funds in the right manner. Some choose to go for direct stock investing just to realise that their hobby cannot beat an expert’s skills of managing mutual funds. So let us teach you the basics of mutual funds investing in this blog.

What are Mutual Funds

Mutual funds pool money from investors and invest it in a basket of assets like stocks, bonds or a mix of both under a professional expert. The expert ensures generating return while managing the risk. For retail investors it allows them to invest regularly via SIPs to buy mutual fund units. The funds would charge an expense ratio in return of service provided by a fund. Also, there’s an exit load which is imposed when you sell the mutual funds within a year. That’s all folks, a Ph.D. is not required when professionals are managing your money.

Types of Mutual Funds

There are thousands of mutual funds floating in the market and each has its own use case. Selecting them to fit your needs is a herculean task, but it's not a worry at all. Depending on your profile, MINTIT precisely suggests tailored investing plans to achieve your goals. But it's good to know the basics:

• Equity Funds- These funds invest primarily in stocks and carry a higher risk, however suitable for the long-term. These have different subcategories like, Large cap, Midcap, Small cap, Flexi cap, Thematic Funds etc.
• Debt Funds- These funds invest in bonds and fixed income instruments which manage and spread the risk. Good for stable returns and diversification.
• Hybrid Funds- Now hybrid funds as the name suggests is a mix of Equity and Debt funds.

Now, there are various differentiation in certain types of mutual funds, for example there are Direct Mutual Funds, Regular Mutual Funds, Passive and Active Mutual Funds etc. To understand all of these in a simplified manner, MINTIT brings you an educational library where you can understand everything about Mutual Funds at one place. Moreover, the MINTIT educational section brings you an extensive library for your personal finance growth. So, learn, invest and grow.

Why Mutual Funds?

Milind’s father says that mutual funds are the easiest and convenient way to invest in growth. After securing the bottom two layers of the financial pyramid which are the insurance and savings layer (refer to MINTIT’s recent blogs), the growth layer offers multiple options like PMS, AIFs, Real Estate, Gold and Mutual Funds. In all the mentioned options, mutual funds are considered to be the best route to invest for growth. Let’s find out why?

Benefits Of Investing Via Mutual Funds

• Diversification- This means that the fund picks selective good fundamental companies and allocate the money according to the weightage. Suppose if one or more stocks underperform, other stocks balance it out.

• SIP Option- Unlike direct stock investing, you do not need to time the market and wait for the right price to buy a stock which nobody knows. You just need to invest regularly to increase the size of your portfolio, while the experts decide where and how much to invest. Start with the SIP of as low as Rs 100 and keep it increasing to build the long-term wealth.
• Professionally Managed- Out of the many benefits mutual funds have, it stands out to be the best for its professional management. You do not need to read the balance sheets and fundamentals of the companies, technical of stocks and other so-called jargons. Just invest and let the expert and money work for you.
• Transparency- Mutual funds in India are regulated by the Securities and Exchange Board of India (SEBI) which ensures investor protection and transparency. Also, the size of the mutual funds industry is over Rs 65 lakh crore, well it is something too big to fail.

Mutual Funds & MINTIT

Milind’s father then suggested to Milind a way which could help his son in his financial journey. ‘Download the MINTIT app on your smartphone,’ he said. It is India’s only dedicated Mutual Fund Platform which caters to your personalised goals and accompanies you to achieve your financial milestones to help you build your wealth. Depending on your profile it precisely suggests tailored investing plans to achieve your goals.

Now Milind can explore the smoothly designed app and play with its features. He learned through MINTIT's educational section about the fundamentals of the financial pyramid, regular vs direct mutual funds, and so on. The platform also encouraged him to set his first goal of buying his own car and got him started with the SIPs in the tailored mutual funds’ plans.

So, stop thinking and start SIPing. Happy Investing!