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Ways To Invest In Mutual Funds Online
Any investor can start investing in the mutual fund using either the single lump-sum payment option or the more flexible systematic investment plan option.
You can start an SIP with a minimum amount of Rs. 500 for some ELSS funds but usually Rs 1000 and the regular contribution interval can be monthly, quarterly, semi-annual and annual payments. SIP is an ideal approach if you are a salaried individual. You can invest in direct mutual funds or regular mutual funds. Both the options have their own pros and cons.
Should You Invest In Stocks Or Mutual Funds
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
Stock should make up the bulk of most portfolios geared toward a long-term goal like retirement. But that doesn’t mean you have to buy and trade individual stocks you can also gain that exposure through equity mutual funds.
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What Is A Sales Load
When you buy your first mutual fund, you may encounter something known as a sales load. There are front-end loads, back-end loads, deferred loads, and declining loads.
While this may sound complicated, it is very important that you understand what these terms mean. This is because buying the wrong type of mutual fund can take thousands or even tens of thousands of dollars directly out of your pocket in the form of commission payments.
Loads are a type of commission. If you are not fully aware of the load your chosen fund has, you can potentially lose thousands of dollars.
Mutual Funds Vs Stocks
What’s the difference between stocks and mutual funds? Stocks are an investment in a single company, while mutual funds hold many investments meaning potentially hundreds of stocks in a single fund.
You can read more about each strategy below, but we’ll give a spoiler for those who don’t want to dig into the details: Many investors will prefer to form the bulk of their portfolios with mutual funds . Once you’re set there, you might choose dedicate 5% or 10% of your portfolio to stock trading for a little thrill.
» Learn more: What are mutual funds and how do they make money?
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Identify Your Investment Goal
Before you start investing in mutual funds, you need to have a clear picture of what you hope to achieve with your investments. Are you pursuing a long-term goal such as retirement or a short-term one like buying a car?
What is your investment budget? Would you like to invest in low-risk, medium-risk, or high-risk funds? These are some of the questions whose answers can help you write out a detailed plan of what you want to achieve with your investments.
Pick An Investment Strategy
So now that you have figured out what you want to achieve with your investment, the next thing is to figure out how you intend to achieve your goals.
What percentage of your income do you intend to invest monthly? Are you a young investor willing to take higher risks? Or are you close to your retirement and would prefer a more conservative approach to achieving your goals?
Do you want your funds to be actively or passively managed?
A proper strategy based on your goals will take you a long way towards making better investments. Youll also want consistency and a clear idea of what you are doing and why even when it requires sudden changes in your investment portfolio.
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Tips On Mutual Fund Investing
- Because of the complexity of mutual funds, it may behoove you to seek the guidance of a financial advisor. Finding the right financial advisor that fits your needs doesnt have to be hard. SmartAssets free tool matches you with financial advisors in your area in 5 minutes. If youre ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- Mutual fund fees can take huge chunks off your returns, which is why you should research investing costs with laser precision. But one good place to start may be with index funds. These passively managed funds generally charge lower fees than actively managed ones.
How To Invest In Mutual Funds Through A Demat Account
You do not need to make an additional effort for investing in a mutual fund if you already have a Demat account. Your existing Demat account and bank account can be used for investing and transacting in the mutual fund.
For investing in mutual fund through demat account, you need to log-in to your Demat account and look for the option to invest in the mutual fund. In the next step, you need to choose the fund in which you want to invest. Then you need to complete the investment by transferring the amount online.
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Executing An Online Mutual Fund Trade
Once your account is active, buying and selling mutual funds is simple. While each site is a little different, they all operate in essentially the same way. Indicate the ticker symbol of the fund you want to buy and the amount you want to investâunlike stocks, mutual funds require you invest a set dollar amount rather than purchasing a certain number of shares. In addition, you may be asked how you want dividend distributions handled : either by using them to buy additional shares of the fund, or having them deposited into your investment account as cash.
Once you fill out the trade request, your trade remains pending until the fund’s daily share value is calculated at the end of the trading day. Most mutual funds report their net asset value by 6 p.m. ET. Once the NAV is reported, you know how many shares you have actually purchased.
It takes between one and three business days for your trade to “settle,” meaning the official financial transaction is not completed right away. The SEC requires it to be no longer than two business days. Investment firms and brokerage sites post information about the time frame for mutual fund trades.
Systematic Withdrawal Plan Or Swp
As the name suggests, this is more of a withdrawal mode than an investment mode but we thought it was worth a mention because investment is all about managing your future needs and expenses.
Picture this you work through your life saving money and investing it meticulously to create a good nest egg. AT retirement, you receive the pay-out as planned and have a good corpus in your bank account. But, you are not so good at managing expenses and end up spending on unnecessary things. This exposes you to the possibility of utilizing the entire corpus and being left with no savings / investments at an old age. Certainly not a pleasing thought.
WISE SPENDING IS A PART OF WISE INVESTING AND IT IS NEVER TOO LATE TO START.
A Systematic Withdrawal Plan steps in right here and ensures that you live a financially healthy life post retirement and never run out of funds. Through this plan you pre-decide the amount of money you wish you withdraw monthly / quarterly to meet your regular expenses. The remaining investment continues to earn returns prolonging the longevity of your funds.
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Setting Up An Online Mutual Fund Account
Once you decide on the financial institution and trading platform for your account, you need to set up that accountâwhich you can do, naturally, online. Most firms make it pretty easyâjust log on to the companyâs site and click a link thatâs usually labeled “Open an Account,””Let’s Get Started,” or something similar. You’ll answer the same questions needed to open any brokerage account: personal info, type of account .
You may also need to indicate whether you want any fund dividends deposited to your account or automatically reinvested back into the fund. And you will have to furnish bank account information, to transfer the cash for your initial investmentâand, if you so designate, to be used as the source for buying additional mutual fund shares each month. Many companies reduce the mandated sum to open an account if you set up one of these automatic investment programs.
Applying online usually takes 10 to 20 minutes. Processing the application and getting your account funded usually takes one to three days.
Various Modes Of Investing In Mutual Funds
Once you have understood your risk preference and finalized the schemes where you want to invest your money, it is important to understand the various modes of investing in mutual funds. In their endeavor to make investments simple and convenient, fund houses offer various modes of investment like:
- Single investment or Lump sum investment
- Systematic Investment Plan or SIP
- Systematic Transfer Plan or STP
- Dividend Transfer Plan or DTP
- Systematic Withdrawal Plan or SWP
These plans are designed to help you find the mode of investment that best suits your income and investment goals. Lets look at each of them in detail:
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Stock Prices Of Reliance Industries Rise Post The Announcement Of Ewpl Acquisition
The share prices of Reliance Industries witnessed gains of about 1% in the early trading hours of 15 March. This comes after the Reliance Group announced that Brookfield will buy the East West Pipeline for Rs.13,000 crore. The EWPL, previously known as the Reliance Gas Transporation Infrastructure Ltd., was said to be in losses and Brookfield has filed a preliminary placement memorandum for the acquisition. The acquisition will be carried out by the India Infrastructure Trust, an InvIT set up by Brookfield as the sponsor and 90% investor.
At the moment, the Pipeline is operated by Pipeline Infrastructure Private Limited, the 100% of the equity interest of which will be acquired by the InvIT. The existing investment of RIL in preference shares valued at Rs.4,000 crore will be retained and at the end of 20 years, it will be converted into equity. Further, after 20 years. Reliance Industries will possess the right to acquire the equity shares of PIPL at an equity price of Rs.50 crore. 10% gains were seen by the stocks of RIL over the last month hitting a life-time high of Rs.1,361.45. On the Bombay Stock Exchange, the stocks of RIL was trading at Rs.1,347.50 with gains of 0.47% or Rs.6.30.
15 March 2019
Benefits Of Investing In Mutual Funds
1) Professional expertise
When you invest in a mutual fund, a professional fund manager handles your investments. A team of researchers who track the market on a real-time basis supports every fund manager. Based on their inputs, fund managers make necessary changes to your mutual fund portfolio to maximize returns. This option can become a suitable option for salaried people who do not have the time to track markets or make timely investments.
2) Convenience
Investing in mutual funds can be a hassle-free and straightforward exercise. The entire process is paperless, and you can complete it from the comfort of your home. And once you begin your investment journey, you can follow your holdings and make necessary adjustments, if needed, through your computer or smartphone.
3) Begin with small investments
Many people assume you can only invest in mutual funds if you have a large sum of money. In reality, you can begin investing with just Rs. 500 per month. A Systematic Investment Plan can help you invest small amounts regularly. And if your income rises over time, you can also increase your SIP allocation. This way, you not only lower your investment costs but also benefit from the power of compounding.
4) Diversification
For instance, a mutual fund that tracks the S& P BSE 100 index could open your investment to as many as 100 securities in a single fund. This can be a simple and cost-effective way of diversifying your portfolio.
5) Tax benefits
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Invest 15% Of Your Income
Wealth building takes hard work and discipline. If you want to invest for your future, you need to plan on investing consistentlyno matter what the market is doing.
We recommend investing 15% of your gross income for retirement. After youve paid off all debt and built a solid emergency fund, you should be able to carve out 15% for your future. It might feel like a sacrifice at first, but its worth it. Once you get in the habit of investing consistently, youll realize you dont even miss that money!
There are no shortcuts to building wealth, but there are strategies that can help your money go further. For example, investing in mutual funds in tax-advantaged accounts through your workplace, like a 401, is a great way to get started. And if you get a company match on your contributions, even better. Thats free money, people!
If you have a traditional 401 at work with a match, invest at least enough to get the match. Then, you can open a Roth IRA. With a Roth IRA, the money you invest in mutual funds goes further because you use after-tax dollarswhich means you wont have to pay taxes on that money when you withdraw it in retirement. Its all yours!
The only downside to a Roth IRA is that it has lower contribution limits than a 401.2 Its possible to max out your Roth IRA without reaching your 15% goal. Thats okay! Just go back to your 401 and invest the rest of your 15% there.
Benefits Of Mutual Funds
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Professionally Managed
A professional money manager makes the investment decisions and monitors the markets, so you dont have to.
Professionally Managed
A professional money manager makes the investment decisions and monitors the markets, so you dont have to.
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Something for Everyone
Whether you want growth, a conservative investment, or something in-between, theres a mutual fund for you.
Something for Everyone
Whether you want growth, a conservative investment, or something in-between, theres a mutual fund for you.
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Easy to Invest
You can have a professionally managed portfolio for an initial investment of just $500.
Easy to Invest
You can have a professionally managed portfolio for an initial investment of just $500.
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Access to Markets
Get convenient access to global capital markets, including equities and fixed income.
Access to Markets
Get convenient access to global capital markets, including equities and fixed income.
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Investment Variety
Mutual funds invest in a variety of equities, bonds and other holdings, giving you a balanced and diversified portfolio.
Investment Variety
Mutual funds invest in a variety of equities, bonds and other holdings, giving you a balanced and diversified portfolio.
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Easy to Invest
Your money is readily accessible because you can redeem the mutual fund units youâve purchased as needed.
Easy to Invest
Your money is readily accessible because you can redeem the mutual fund units youâve purchased as needed.
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Whats The Right Mutual Fund For Me
Before deciding to invest in any fund, you should determine your risk tolerance and financial goals. For example, you may have a higher risk tolerance if youre saving for long-term goals such as retirement and you have time to stomach downturns with a diversified portfolio.
So if you have a high risk tolerance, you may be interested in aggressive stock funds. These generally focus on growth-oriented stocks overseeing a buy-and-hold strategy. Even high-yield bond funds can carry this kind of risk while aiming for a greater overall return.
But what if you have a low risk tolerance? For instance, you may be in or approaching retirement when preserving capital, and income can be crucial. In these cases, it may be wiser to invest in bond funds that hold high-rated corporate and government bonds. Or you may be interested in a balanced fund with an appropriate allocation to dividend-paying stocks and interest-bearing bonds. These tend to pay dividends on a quarterly or annual basis.
But you also consider how investing in any of these may affect your personal tax situation as well as your unique financial goals. This is why seeking help from a financial advisor can be highly beneficial.
Once you have a grasp of what type of mutual fund you may want to invest in, the next step is to focus on fees.
