Investing your hard-earned money can appear intimidating, and you could often get lured into schemes that may not work best for you. Learning how to invest in Mutual Funds is a good step for beginners in the world of investing.

Lack of knowledge about investing is really what keeps beginner investors from growing their wealth. However, this is not the case with mutual funds as they are managed by professional Fund managers who have extensive knowledge and can help you grow your corpus.

If you’re a beginner, mutual funds can be the safest option to invest your money in the stock market.

As opposed to investing directly in shares, these funds let you benefit from high rates of return on investment with relatively less risk.

Curious to know more before investing in mutual funds? Keep scrolling.

Understanding how mutual funds work is the first step to invest in mutual funds

Understanding how to invest in mutual funds can help you achieve your financial goals and boost your wealth.

If you invest in mutual funds, you can achieve a diversified portfolio and grow your wealth.

While there are numerous investment options for you to explore, most experienced financial advisors advise investing in mutual funds. Why?

Mutual funds investment may seem complicated for first-time investors, but once you know how mutual funds work, investing in them is simple and cost-efficient.

You must first understand what exactly mutual funds are and how mutual funds work. This will help you make an informed decision.

What are mutual funds?

When you invest in a mutual fund, your money goes into a pooled amount collected from multiple investors.

Your money is then collectively invested in different types of financial instruments.

These include equity funds, debt funds, real estate, etc., depending on the type of mutual fund.

Unlike investing in the stock market, when you invest in mutual funds, you invest in an asset management firm that invests your money in different assets, giving you a diversified portfolio.

Investing through a finance professional, a seasoned fund manager with extensive financial knowledge is always recommended. These fund managers conduct thorough research by analyzing exhaustive statistical data before investing your funds on your behalf.

Now that you know what mutual funds are, let’s outline how mutual funds work in a scenario.

How do Mutual Funds work?

Suppose you have invested INR 1,000/- into a mutual fund. If you are the only individual investing a meagre amount, the returns will not be as significant as expected.

However, in a mutual fund, there are numerous investors like you who invest similar amounts, creating a large pool of money. An asset management company takes this sizable corpus and invests the pooled funds into securities such as stocks, bonds, and short-term debt.

You can invest as low as Rs 500 in a mutual fund through SIP, which may not be possible with most other investment options. There are several mutual funds available, and you may invest in funds whose investment objectives and risk levels are in sync with your risk profile.

Factors That Affect Investment in Mutual Funds

Four important factors facilitate the working of a mutual fund.

Net Asset Value (NAV)

The overall cost of a mutual fund depends on the price per unit, known as the net asset value (NAV).

Your Net Asset Value is a numerical value assigned to the mutual funds you have invested in.

It constitutes the price of one single unit of the mutual fund.

If you wish to calculate it, you must divide the total cash value of the mutual fund (after subtracting all charges and liabilities) by the total number of mutual fund shares. This gives you the price per unit.

This net asset value changes every day as the market value of the securities change. The net asset value determines whether a mutual fund is performing well or is underperforming.

Fund Manager

A fund manager ensures the success of your Mutual Fund. They have real-time access to crucial market information unavailable to everyone. They execute trades on the largest and most cost-effective scale by monitoring the companies they have invested in.

Assets Under Management (AUM)

Mutual fund companies invest in assets using the money collected from investors. These assets include stocks, bonds, and other securities.

You can find out the total value of all assets a mutual fund buys on your behalf under assets under management (AUM).

Investment Goal

The agenda behind the investment determines the path taken to invest. Every mutual fund has a goal which it aims to achieve on behalf of its investors. This goal could be capital appreciation, profits in the long term, or distributing regular fixed income as dividends. You should always consider these goals and match them with yours before selecting a Mutual Fund.

Types of Mutual Funds – Asset Class, Structure, Risk & Benefits

If you are thinking of diversifying your investments, there are various types of mutual fund options that you can opt for. They can be categorized based on various characteristics like asset class, investment goals and risk. 

In the article below, learn about the different types of mutual funds and the benefits that they offer. 

Types of Mutual Funds

Considering investing in Mutual Funds? Then it is of utmost importance to understand the various mutual fund types and the benefits they offer. Mutual fund types can be classified based on various characteristics. Learn more about different mutual fund types below:

Based on Asset Class

The classification of mutual funds based on asset class is as follows: 

Equity Funds

Equity funds primarily invest in stocks, and hence go by the name of stock funds as well. They invest the money pooled in from various investors from diverse backgrounds into shares/stocks of different companies. The gains and losses associated with these funds depend solely on how the invested shares perform (price-hikes or price-drops) in the stock market. Also, equity funds have the potential to generate significant returns over a period. Hence, the risk associated with these funds also tends to be comparatively higher.

Debt Funds

Debt funds invest primarily in fixed-income securities such as bonds, securities and treasury bills. They invest in various fixed income instruments such as Fixed Maturity Plans (FMPs), Gilt Funds, Liquid Funds, Short-Term Plans, Long-Term Bonds and Monthly Income Plans, among others. Since the investments come with a fixed interest rate and maturity date, it can be a great option for passive investors looking for regular income (interest and capital appreciation) with minimal risks.

Money Market Funds

Investors trade stocks in the stock market. In the same way, investors also invest in the money market, also known as capital market or cash market. The government runs it in association with banks, financial institutions and other corporations by issuing money market securities like bonds, T-bills, dated securities and certificates of deposits, among others. The fund manager invests your money and disburses regular dividends in return. Opting for a short-term plan (not more than 13 months) can lower the risk of investment considerably on such funds.

Hybrid Funds

As the name suggests, hybrid funds (Balanced Funds) is an optimum mix of bonds and stocks, thereby bridging the gap between equity funds and debt funds. The ratio can either be variable or fixed. In short, it takes the best of two mutual funds by distributing, say, 60% of assets in stocks and the rest in bonds or vice versa. Hybrid funds are suitable for investors looking to take more risks for ‘debt plus returns’ benefit rather than sticking to lower but steady income schemes.

Based on Investment Goals

Here are the different types of mutual funds based on investment goals:

Growth Funds

Growth funds usually allocate a considerable portion in shares and growth sectors, suitable for investors (mostly Millennials) who have a surplus of idle money to be distributed in riskier plans (albeit with possibly high returns) or are positive about the scheme.

Income Funds

Income funds belong to the family of debt mutual funds that distribute their money in a mix of bonds, certificate of deposits and securities among others. Helmed by skilled fund managers who keep the portfolio in tandem with the rate fluctuations without compromising on the portfolio’s creditworthiness, income funds have historically earned investors better returns than deposits. They are best suited for risk-averse investors with a 2-3 years perspective.

Liquid Funds

Like income funds, liquid funds also belong to the debt fund category as they invest in debt instruments and money market with a tenure of up to 91 days. The maximum sum allowed to invest is Rs 10 lakh. A highlighting feature that differentiates liquid funds from other debt funds is the way the Net Asset Value is calculated. The NAV of liquid funds is calculated for 365 days (including Sundays) while for others, only business days are considered.

Tax-Saving Funds

ELSS or Equity Linked Saving Scheme, over the years, have climbed up the ranks among all categories of investors. Not only do they offer the benefit of wealth maximisation while allowing you to save on taxes, but they also come with the lowest lock-in period of only three years. Investing predominantly in equity (and related products), they are known to generate non-taxed returns in the range 14-16%. These funds are best-suited for salaried investors with a long-term investment horizon.

Aggressive Growth Funds

Slightly on the riskier side when choosing where to invest in, the Aggressive Growth Fund is designed to make steep monetary gains. Though susceptible to market volatility, one can decide on the fund as per the beta (the tool to gauge the fund’s movement in comparison with the market). Example, if the market shows a beta of 1, an aggressive growth fund will reflect a higher beta, say, 1.10 or above.

Capital Protection Funds

If protecting the principal is the priority, Capital Protection Funds serves the purpose while earning relatively smaller returns (12% at best). The fund manager invests a portion of the money in bonds or Certificates of Deposits and the rest towards equities. Though the probability of incurring any loss is quite low, it is advised to stay invested for at least three years (closed-ended) to safeguard your money, and also the returns are taxable.

Fixed Maturity Funds

Many investors choose to invest towards the of the FY ends to take advantage of triple indexation, thereby bringing down tax burden. If uncomfortable with the debt market trends and related risks, Fixed Maturity Plans (FMP) – which invest in bonds, securities, money market etc. – present a great opportunity. As a close-ended plan, FMP functions on a fixed maturity period, which could range from one month to five years (like FDs). The fund manager ensures that the money is allocated to an investment with the same tenure, to reap accrual interest at the time of FMP maturity.

Pension Funds

Putting away a portion of your income in a chosen pension fund to accrue over a long period to secure you and your family’s financial future after retiring from regular employment can take care of most contingencies (like a medical emergency or children’s wedding). Relying solely on savings to get through your golden years is not recommended as savings (no matter how big) get used up. EPF is an example, but there are many lucrative schemes offered by banks, insurance firms etc.

Based on Structure

Mutual funds are also categorized based on different attributes (like risk profile, asset class, etc.). The structural classification – open-ended funds, close-ended funds, and interval funds – is quite broad, and the differentiation primarily depends on the flexibility to purchase and sell the individual mutual fund units.

Open-Ended Funds

Open-ended funds do not have any particular constraint such as a specific period or the number of units which can be traded. These funds allow investors to trade funds at their convenience and exit when required at the prevailing NAV (Net Asset Value). This is the sole reason why the unit capital continually changes with new entries and exits. An open-ended fund can also decide to stop taking in new investors if they do not want to (or cannot manage significant funds).

Closed-Ended Funds

In closed-ended funds, the unit capital to invest is pre-defined. Meaning the fund company cannot sell more than the pre-agreed number of units. Some funds also come with a New Fund Offer (NFO) period; wherein there is a deadline to buy units. NFOs comes with a pre-defined maturity tenure with fund managers open to any fund size. Hence, SEBI has mandated that investors be given the option to either repurchase option or list the funds on stock exchanges to exit the schemes.

Interval Funds

Interval funds have traits of both open-ended and closed-ended funds. These funds are open for purchase or redemption only during specific intervals (decided by the fund house) and closed the rest of the time. Also, no transactions will be permitted for at least two years. These funds are suitable for investors looking to save a lump sum amount for a short-term financial goal, say, in 3-12 months.

Based on Risk

The mutual fund types based on risk are:

Very Low-Risk Funds

Liquid funds and ultra-short-term funds (one month to one year) are known for its low risk, and understandably their returns are also low (6% at best). Investors choose this to fulfil their short-term financial goals and to keep their money safe through these funds.

Low-Risk Funds

In the event of rupee depreciation or unexpected national crisis, investors are unsure about investing in riskier funds. In such cases, fund managers recommend putting money in either one or a combination of liquid, ultra short-term or arbitrage funds. Returns could be 6-8%, but the investors are free to switch when valuations become more stable.

Medium-risk Funds

Here, the risk factor is of medium level as the fund manager invests a portion in debt and the rest in equity funds. The NAV is not that volatile, and the average returns could be 9-12%.

High-Risk Funds

Suitable for investors with no risk aversion and aiming for huge returns in the form of interest and dividends, high-risk mutual funds need active fund management. Regular performance reviews are mandatory as they are susceptible to market volatility. You can expect 15% returns, though most high-risk funds generally provide up to 20% returns.

Specialized Mutual Funds

These mutual funds are based on specific industries:

Sector Funds

Sector funds invest solely in one specific sector, theme-based mutual funds. As these funds invest only in specific sectors with only a few stocks, the risk factor is on the higher side. Investors are advised to keep track of the various sector-related trends. Sector funds also deliver great returns. Some areas of banking, IT and pharma have witnessed huge and consistent growth in the recent past and are predicted to be promising in future as well.

Index Funds

Suited best for passive investors, index funds put money in an index. A fund manager does not manage it. An index fund identifies stocks and their corresponding ratio in the market index and put the money in similar proportion in similar stocks. Even if they cannot outdo the market (which is the reason why they are not popular in India), they play it safe by mimicking the index performance.

Funds of Funds

A diversified mutual fund investment portfolio offers a slew of benefits, and ‘Funds of Funds’ also known as multi-manager mutual funds are made to exploit this to the tilt – by putting their money in diverse fund categories. In short, buying one fund that invests in many funds rather than investing in several achieves diversification while keeping the cost down at the same time.

Emerging market Funds

To invest in developing markets is considered a risky bet, and it has undergone negative returns too. India, in itself, is a dynamic and emerging market where investors earn high returns from the domestic stock market. Like all markets, they are also prone to market fluctuations. Also, from a longer-term perspective, emerging economies are expected to contribute to the majority of global growth in the following decades.

International/ Foreign Funds

Favoured by investors looking to spread their investment to other countries, foreign mutual funds can get investors good returns even when the Indian Stock Markets perform well. An investor can employ a hybrid approach (say, 60% in domestic equities and the rest in overseas funds) or a feeder approach (getting local funds to place them in foreign stocks) or a theme-based allocation (e.g., gold mining).

Global Funds

Aside from the same lexical meaning, global funds are quite different from International Funds. While a global fund chiefly invests in markets worldwide, it also includes investment in your home country. The International Funds concentrate solely on foreign markets. Diverse and universal in approach, global funds can be quite risky to owing to different policies, market and currency variations, though it does work as a break against inflation and long-term returns have been historically high.

Real Estate Funds

Despite the real estate boom in India, many investors are still hesitant to invest in such projects due to its multiple risks. Real estate fund can be a perfect alternative as the investor will be an indirect participant by putting their money in established real estate companies/trusts rather than projects. A long-term investment negates risks and legal hassles when it comes to purchasing a property as well as provide liquidity to some extent.

Commodity-focused Stock Funds

These funds are ideal for investors with sufficient risk-appetite and looking to diversify their portfolio. Commodity-focused stock funds give a chance to dabble in multiple and diverse trades. Returns, however, may not be periodic and are either based on the performance of the stock company or the commodity itself. Gold is the only commodity in which mutual funds can invest directly in India. The rest purchase fund units or shares from commodity businesses.

Market Neutral Funds

For investors seeking protection from unfavourable market tendencies while sustaining good returns, market-neutral funds meet the purpose (like a hedge fund). With better risk-adaptability, these funds give high returns where even small investors can outstrip the market without stretching the portfolio limits.

Inverse/Leveraged Funds

While a regular index fund moves in tandem with the benchmark index, the returns of an inverse index fund shift in the opposite direction. It is nothing but selling your shares when the stock goes down, only to repurchase them at an even lesser cost (to hold until the price goes up again).

Asset Allocation Funds

Combining debt, equity and even gold in an optimum ratio, this is a greatly flexible fund. Based on a pre-set formula or fund manager’s inferences based on the current market trends, asset allocation funds can regulate the equity-debt distribution. It is almost like hybrid funds but requires great expertise in choosing and allocation of the bonds and stocks from the fund manager.

Gift Funds

Yes, you can also gift a mutual fund or a SIP to your loved ones to secure their financial future.

Exchange-traded Funds

It belongs to the index funds family and is bought and sold on exchanges. Exchange-traded Funds have unlocked a new world of investment prospects, enabling investors to gain extensive exposure to stock markets abroad as well as specialized sectors. An ETF is like a mutual fund that can be traded in real-time at a price that may rise or fall many times in a day.

As a tax-paying citizen, Section-80C of the Indian Tax Act allows you some breather – a deduction of up to 150,000 from your total annual income.

Difference between actively managed funds and passively managed funds

What is an Actively Managed Portfolio?

Equity mutual funds, debt mutual funds, hybrid funds, or fund of funds, are all actively managed funds.

Like in the case of an equity fund, there is a dedicated fund manager who decides which stocks will go in and out of an equity fund according to the performance of the larger markets and economies and the individual performance of the stocks.

The fund manager also needs to decide if the existing stocks will remain in the same concentration if the funds invested in individual stocks need to be increased or decreased.

In other words, a fund manager has a lot to do with an equity fund’s performance. Well, we took the example of an equity fund. The case is the same for all other fund categories in the active management category.

What is a Passively Managed Portfolio?

We will understand passive investing too with the help of an example. Exchange-Traded Funds (ETFs) are passively managed funds. In ETFs, the fund maps the movement of an index and that’s all the fund does. Since what goes in and out of the index is not at the discretion of fund managers but SEBI (Securities and Exchange Board of India), the fund just directly maps the movement of the index.

The returns of the index are translated into the returns that ETFs make. Differences could be due to expense ratio charges, management fees, or any other fees or dividends.

Advantages and Disadvantages of Actively Managed Mutual Funds Versus Passively Managed Mutual Funds

The table below shows how actively managed mutual funds differ from passively managed mutual funds.

How you can earn returns from investing in mutual funds

When you invest in mutual funds, you can earn in two different ways – through dividends and capital gains.

If you invest in a mutual fund, the stocks that your fund manager picks will provide dividends based on their market earnings. If you choose to receive these dividends, then you earn this amount. However, many asset management companies will give you a second option, wherein you can reinvest your dividends and grow your money with the power of compounding.

You can also make money via capital gains. This is similar to the share market, where you buy the units of a mutual fund for a particular price, and when the price of your units increases at some point in the future, you sell your units and earn a profit.

Strategies to invest in mutual funds

Constructing Your Mutual Fund Portfolio

Creating a well-structured mutual fund portfolio involves careful consideration of your risk tolerance, investment goals, and time horizon.

There’s no one-size-fits-all approach, and your portfolio will be unique.

Diversification is key to managing risk effectively. Instead of sticking to a single category, spreading your investments across different categories can help you achieve a balanced risk-return profile.

Large Cap Funds: These are suitable for investors seeking stable growth over the long term. They offer exposure to well-established companies with lower risk levels. Investors with a low-risk appetite can benefit from the consistent returns provided by large-cap funds.

Mid Cap Funds: For those looking for a balance between growth potential and stability, mid-cap funds can be an ideal choice. They offer higher growth potential compared to large-cap funds but come with higher volatility. They can act as a hedge against market volatility.

Small Cap Funds: If you’re aiming for higher returns and are willing to take on more risk, small-cap funds can be appealing. They invest in smaller companies with the potential for significant growth. These funds are best suited for long-term investors who can weather the volatility.

Investing in mutual funds: A step-by-step guide

How to Invest in Mutual Funds – 5 Easy Steps

If you are wondering how to invest in mutual funds, you can follow these 5 easy steps for investing in mutual funds-

• Step 1: Start with risk profiling, i.e., to understand your risk tolerance and capacity. Knowing the amount of risk, one can take before investing in mutual funds is essential.
  
• Step 2: After completing the risk profiling, the next step is asset allocation, where you must divide your money between various asset classes. Asset allocation should include a mix of equity and debt instruments to balance the risk factors.
  
• Step 3: The third step is the identification of funds that invest in each asset class. Then, you can check for past performance or investment objectives for comparing mutual funds.
  
• Step 4: Select and decide the mutual fund scheme you will invest in. You can then start the application either online or offline.
  
• Step 5: Diversifying your investments and regular follow-ups are essential to ensure better results and higher profit.

How to Invest in Mutual Funds Online?

It is essential to understand how to invest in mutual funds through online mode. Investing in Mutual Funds, Online can be pretty simple and can be made in one of two ways-

1) How to invest in mutual funds through an Account on an Official Website (AMC Website)

Every Asset Management Company has an official website where you can find multiple Mutual Funds in each category to invest. You have to follow the instructions provided on the offi5cial site of the fund house, fill in all the required information, and submit it.

The KYC process can also be completed online (e-KYC), for which only the Aadhar Number and PAN are needed. The information provided by you is verified at the backend, and you can start investing upon successful verification. 

2) How to invest in mutual funds through an app

Asset Management Companies allow investors to invest in Mutual Funds through mobile applications quickly and hassle-free. The AMCs have mobile applications, and third-party mutual fund aggregators provide a platform to invest in Mutual Funds.

The app enables the investor to invest in Mutual Fund Schemes, view account statements, buy or sell units and check other relevant details about their portfolio. Moreover, investors can invest in various funds offered by different fund houses.

Best mutual funds to invest

Best Mutual Fund for Beginners 2023 – Overview

The performance statistics, investment goals, and other critical information about the aforementioned Mutual Funds are listed below-

1) Canara Robeco Equity Tax Saver Fund

Canara Robeco Equity Tax Saver Direct-Growth is an Equity Mutual Fund Scheme launched by Canara Robeco Mutual Fund. This scheme was made available to investors on 19 Dec 1987. The scheme seeks to achieve long-term capital appreciation by predominantly investing in equities.

It also offers tax benefits under Section 80C. The investments may be made in primary and secondary markets, and the scheme may also invest in overseas equity markets like ADRs/GDRs. This is one of the best schemes for investing in Mutual Funds for beginners.

2) ICICI Prudential Equity & Debt Fund

ICICI Prudential Equity & Debt Fund Growth is a Hybrid Mutual Fund Scheme launched by ICICI Prudential Mutual Fund. This scheme was made available to investors on 12 Oct 1993.

The scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio of equities and related securities as well as fixed income and money market securities.

3) DSP Tax Saver Fund

DSP Tax Saver Direct Plan-Growth is an Equity Mutual Fund Scheme launched by DSP Mutual Fund. This scheme was made available to investors on 16 December 1996.

The scheme seeks to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity-related securities of corporates and to enable investors to avail of deduction from total income, as permitted under the Income Tax Act. This is considered as other top Mutual Funds investment plans for beginners.

4) Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Mirae Asset Mutual Fund. This scheme was made available to investors on 26 April 2019.

The scheme seeks long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments. Mirae Asset Tax Saver Fund – Direct plan – Growth is ideal for investors looking to park their money into an investment for more than three years.

Being an ELSS fund serves the dual purpose of tax saving and long-term wealth creation for investors.

5) Kotak Tax Saver Fund

Kotak Tax Saver Fund Direct-Growth is an Equity Mutual Fund Scheme launched by Kotak Mahindra Mutual Fund. This scheme was made available to investors on 05 Aug 1994.

The scheme aims to generate long-term capital appreciation from a diversified portfolio of equity and equity-related securities and enable investors to avail of the income tax rebate per prevailing tax laws.

6) Edelweiss Aggressive Hybrid Fund

Edelweiss Aggressive Hybrid Fund Direct-Growth is a Hybrid Mutual Fund Scheme launched by Edelweiss Mutual Fund. This scheme was made available to investors on 30 April 2008.

The scheme seeks to generate long-term capital and current income growth through a portfolio investing predominantly in equity and equity-related instruments and the balance in debt and money market securities.

7) SBI Equity Hybrid Fund

SBI Equity Hybrid Fund Direct Plan-Growth is a Hybrid Mutual Fund Scheme launched by SBI Mutual Fund. This scheme was made available to investors on 29 June 1987.

The scheme seeks to provide investors with long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high-growth companies and balance the risk by investing the rest in fixed-income securities.

8) Baroda BNP Paribas Aggressive Hybrid Fund

Baroda BNP Paribas Aggressive Hybrid Fund Direct-Growth is a Hybrid Mutual Fund Scheme launched by BNP Paribas Mutual Fund. This scheme was made available to investors on 15 April 2004.

The Scheme seeks to generate income and capital appreciation by investing in a diversified portfolio of equity-related and fixed-income instruments.

Overview of the Best Investment Plan for Senior Citizens in the Mutual Fund Category

1) ICICI Prudential Balanced Advantage Direct-Growth

ICICI Prudential Balanced Advantage Direct-Growth is a Hybrid Mutual Fund Scheme launched by ICICI Prudential Mutual Fund. This scheme was made available to investors on 12 Oct 1993.

The scheme seeks to provide investors with capital appreciation and income distribution by using equity derivatives strategies, arbitrage opportunities and pure equity investments. This is considered one of the best Mutual Funds options.   

2) Axis BlueChip Fund Direct Plan-Growth

Axis BlueChip Fund Direct Plan-Growth is an Equity Mutual Fund Scheme launched by Axis Mutual Fund. This scheme was made available to investors on 04 Sep 2009.

The scheme aims to generate long-term capital growth by investing in a diversified portfolio predominantly consisting of equity & equity-related instruments of large-cap companies.

Axis Blue Chip Fund-Direct (Growth), being an equity fund, is suitable for investors aiming for long-term capital appreciation.

You can ideally invest in this fund with an investment horizon of more than five years, but there is no lock-in period in this fund.

3) ICICI Prudential Ultra Short-Term Fund Direct-Growth

ICICI Prudential Ultra Short-Term Fund Direct-Growth is a Debt Mutual Fund Scheme launched by ICICI Prudential Mutual Fund. This scheme was made available to investors on 12 Oct 1993.

The ICICI Prudential Ultra Short-Term Fund Direct-Growth is rated Moderate risk. The minimum SIP Investment is set to INR 1,000. The minimum lumpsum Investment is INR 5,000. The scheme seeks to generate income through investments in a range of debt and money market instruments. 

4) HDFC Short-Term Debt Fund Direct Plan-Growth

HDFC Short Term Debt Fund Direct Plan-Growth is a Debt Mutual Fund Scheme launched by HDFC Mutual Fund. This scheme was made available to investors on 10 Dec 1999. The HDFC Short Term Debt Fund Direct Plan-Growth is rated Moderate risk.

The minimum SIP Investment is set to INR 300. The minimum Lumpsum Investment is ₹5,000. The scheme seeks to generate regular income through investment in debt securities and money market instruments.

5) HDFC Retirement Savings Fund Equity Plan Direct-Growth

HDFC Retirement Savings Fund Equity Plan Direct-Growth is a Solution Oriented Mutual Fund Scheme launched by HDFC Mutual Fund. This scheme was made available to investors on 10 Dec 1999.

The HDFC Retirement Savings Fund Equity Plan Direct-Growth is rated Very High risk. The minimum SIP Investment is set to INR 300. The minimum Lumpsum Investment is INR 5,000. The Scheme seeks to provide long-term capital appreciation/income by investing in a mix of equity and debt instruments to help investors meet their retirement goals.

Are mutual funds safe?

Mutual funds are structurally safe and regulated by SEBI (Securities and Exchange Board of India), just like the Reserve Bank of India regulates banks.

The companies running these mutual funds (known as Asset Management Companies) must meet many legal requirements.

So, if you need any details about my investments, your fund manager is legally obligated to release detailed data about how they operate and where they invest.

Everything is transparent, giving you the power to monitor your hard-earned money.

Moreover, to ensure your money is safe, SEBI has directed that AMCs also have a portion of their own money invested in their funds to add that extra layer of protection.

Tips on avoiding fraud when investing in mutual funds

Whether you are considering putting some money into mutual funds, or you have already invested in some funds, some common signs exist that might indicate you are dealing with a fraudulent broker.

The following tips will help you avoid and/or detect mutual fund fraud:

• Research the fund. SEBI requires each mutual fund to file and submit regular shareholder reports. Read these items to ensure the fund is registered and legit. You can also check that the investment advisor who manages the fund is registered with SEBI.
• Talk about risks and fee structure. If your broker has advised you to invest in particular mutual funds without discussing the risks and fee structure, then they are incompetent at best, but quite possibly are trying to benefit from your investment in an unethical manner.
• Check for excessive trades. Investing in mutual funds is typically a long-term, wealth-building investment strategy. If your broker continues to advise you to trade frequently, they might be committing fraud. You should also check your monthly statements from your brokerage account, as your broker might be making unauthorized mutual fund trades.
• Consider the number of funds. As previously mentioned, the more shares you buy in a mutual fund, the less commissions you pay, so for this reason, clients of honest brokers have most of their money invested in a small number of funds. If your broker advises you to invest a small amount in multiple funds, you are not getting the benefit of bulk discounts on commission fees. It’s likely your broker is committing fraud.

Conclusion

Mutual Funds can prove to be an ideal investment as they provide steady, risk-managed returns.

You would need to open a Demat account online for trading or investing for the short or the long term.

You can do this through a depository participant, which could be a bank or a brokerage firm.

With a reliable depository participant, you can have an all-in-one account to trade or invest in various Mutual Funds online at your convenience.

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