A Beginner’s Guide to Investing in Mutual Fund Schemes

To substantiate the super-expensive lifestyle, you will definitely need another source of income. This is when you take investing in shares, mutual funds or SIP schemes into consideration.


In today’s fast-paced world, everything has become prohibitively expensive. You will literally have to pay through your nose to fund your daughter’s or son’s education. The food products have become so expensive. To catch up with the new lifestyle, what are you simply going to do?

The income levels may not appreciate at a rapid note. To substantiate the super-expensive lifestyle, you will definitely need another source of income. This is when you take investing in shares, mutual funds or SIP schemes into consideration. You can save money in trickles so that you receive the lump sum at the time the scheme matures.

Here is a step by step beginner’s guide towards investing in mutual fund schemes:

Account Opening and KYC Compliance

Opening an online mutual fund account today is very easy process and takes 2 minutes of your time. You can open an account either with Mutual Fund Company or with the online platform selling Direct Mutual Fund.

KYC compliance is mandatory and you will have to submit documents like:

  • Proof of identity (Pan Card/Aadhar Card/Voter Id/Driving License/Passport)
  • Proof of residence (passport/electric bill/phone bill)
  • Fully Filled application form
  • Recent passport size photographs

You can submit self attested documents through the transfer agent or directly to the mutual fund houses. Submission of pan card is compulsory if your investment exceeds Rupees 50,000.

Choosing the right mutual fund

Well, that can be tricky for most of you. There is a lot to analyze before finalizing the mutual fund for your investment. You need to consider the Duration and Investment value along with choosing the right category of mutual funds as per your goal. Before you start investing in mutual funds, ensure that you get acquainted with the new categorization of mutual funds as per SEBI. It is broadly categorized in Equity Schemes, Debt Schemes, Hybrid Schemes, Solution Oriented schemes and other schemes. It is further sub-categorized in Large Cap, Mid Cap and Small Cap.

You can opt for Equity or Debt schemes as per your risk appetite or opt for a balanced scheme which is a fine mix of both i.e. Equity Schemes + Debt Schemes. An equity scheme is linked with the day-to-day volatility of the market. So, higher the risk and higher may be the gains. Debt Schemes are considered as a bit conservative method as capital preservation is foremost and more important than higher risk of return.

You can do it yourself or let the Robotic advisory platform help you by suggesting the right portfolio as per your Goal.

Choose between Direct or Regular Plan

Once you have understood about the categorization of the mutual funds, it is important to analyze the best for you to start the investment. You will now have to figure out how you are going to manage your funds or your investment portfolio. Opting for Direct Plan as against regular plan can save your AMC charges around 0.75 to 1% respectively.


If you are new to investing, the answer to the above question may be a straight NO. You will have to figure out how much to invest, tracking of funds, rebalancing, switching of funds, etc. You can also opt for Robo Advisory online platform that can suggest you on the basis of algorithm, history of the funds and your goal. You can easily track and manage your portfolio by yourself.

Choose between LUMPSUM or SIP method

Now, this is the most important point to be considered before you start investing in mutual fund. You can either choose Lumpsum method wherein the investment is done at once with all the money (budget) in hand or you can also opt for the SIP method wherein you can plan the investment in Systematic Investment plan (SIP) method. SIP is considered as the best way to investing in mutual funds because you have to invest in smaller parts of segments rather than putting all your eggs in one basket.

 Let us illustrate with the help of an example:

Suppose you have decided to invest Rs. 1 Lac out of your planned savings in mutual funds. You have both the above options either i.e. to invest all the funds at the start or opt for the SIP method to invest Rs. 10000/- on a monthly basis in the mutual fund. With the help of the SIP method, you can not only go in a planned way but also may be able to optimize the Net Asset Value (NAV) of your holdings. The SIP method is best if you wish to invest in Equity funds.

Know the right time to Enter or Exit

Once you start investing in mutual funds, it is also advised to keep track of your portfolio if it is done in Equity schemes especially because it is linked with the markets. Online platforms can not only guide you well to monitor but also keep on suggesting you the right time to enter or exit from any fund. You get an easy-to-use Dashboard to monitor your portfolios and suggestions keep on coming to you which are purely on the basis of an automated analytics based Robo-Advisors.

You can invest in the mutual funds on the basis of either short or long term goals like buying a car, kids’ education, planning holidays, or keeping your retirement in mind. It is better if you keep your goal defined and invest accordingly. Wisely choosing your goals and taking right decision to enter or exit from any fund can keep you happy.

(If you have any mutual fund queries, message on Invezta on Facebook. We will get it answered by our panel of experts.)