Curious About Mutual Funds? Understanding How to Start and Compare with Stocks

How can I invest in a mutual fund? How much is the minimum amount to invest? Is mutual fund investment better than investing in shares?

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To invest in a mutual fund, you can typically do so through a brokerage account or directly through the mutual fund company. The minimum amount required to invest in a mutual fund can vary depending on the fund and the company managing it. Some funds may have minimum initial investment requirements, which can range from a few hundred to a few thousand dollars.

When comparing mutual fund investment with investing in shares, it's essential to consider your investment goals, risk tolerance, and investment timeline. Mutual funds offer diversification across a range of assets, which can help reduce risk compared to investing in individual stocks. However, investing in shares can provide the opportunity for higher returns but comes with higher risk due to the lack of diversification.

Ultimately, the decision between investing in mutual funds or shares depends on your financial objectives and risk appetite. It may be beneficial to consult with a financial advisor to determine the best investment strategy based on your individual circumstances.

Hi Vignesh,

You asked about the investment options, whether to invest in shares or mutual funds. A mutual fund is nothing but investing in a group of shares from different industries managed by efficient fund managers or portfolio managers. Also, in shares, the risk is more, and the return is also higher. You have to study a lot to analyze the company before investing in it. In a mutual fund, your fund will not only be in shares; some part of it will be preserved in fixed income securities, resulting in low risk and moderate income.

Nowadays, the market is good, and your fund could double within three years. If you choose to invest in fixed deposits or post office savings, it may take 6 to 10 years to double your money. You can explore some LIC insurance options like Money Plus, Profit Plus, etc., which offer good earnings.

You can observe Warren Buffett: He made investments at the age of 11. "Investments are wealth."

Vijay Karthik, B.E., MBA.,
Coimbatore.

Dear Vijay,

I would like to know if it is better to go for bulk investment or take SIP in mutual funds. Also, please explain entry load and exit load.

Swati.

Hi,

SIP (Systematic Investment Plan) is a much better option than Lumpsum Investment because when the market is down, you will get more units. Also, one can start SIP with Rs. 1000 per month.

In the case of Open-ended funds, the Entry Load is Nil, and the Exit load is 1-2% if you switch or redeem within a year. After 1 year, it is Nil.

Yamini
yamini.mundhra@investcare.in