Who can invest in mutual funds?

Mutual funds are investment funds that pool money from different investors (individuals and institutional) with a common investment objective. These funds are professionally managed by fund managers who aim to strategically invest in financial securities that generate maximum returns for the investors as per the investment objective of the concerned mutual fund.

Mutual funds offer significant advantages over other traditional financial products, such as fixed deposits and Public Provident Fund (PPF). You can start a mutual fund with as low as Rs. 500 and invest in securities that align with your risk appetite. Moreover, you get tax benefits under Section 80C up to Rs. 1.5 lakhs. Further, anyone who meets the criteria of the mutual fund investment schemes can invest in these financial products.

If you are a first-time mutual fund investor, here is a quick guide that will help you invest in mutual funds:

Eligibility for mutual fund investments

The following persons are eligible to invest in mutual funds:

  • Indian resident adult individuals (single or joint investment)
  • Minors via a parent or lawful guardian
  • Non-resident Indians (NRIs)
  • Religious and charitable trusts
  • Private trusts
  • Partnership firms
  • Hindu Undivided Family (HUF)
  • Banks and financial institutions
  • Foreign Institutional Investors (FIIs)
  • Units/Entities listed under the Societies Registration Act, 1860
  • Army, Navy, Air Force, and similar eligible institutions
  • Research and science-related organizations
  • Government or RBI approved international multilateral agencies

All investors should complete the KYC (Know Your Customer) verification process by approaching a distributor or investment advisor or doing an e-KYC online.

You can start your ELSS (Equity Linked Savings Scheme; tax-saving) investment with Rs. 500. In a SIP (Systematic Investment Plan) method, your investment is automatically deducted from your specified bank account every month. You can also alter your frequency of deduction in a SIP.

Reason for investing in mutual funds

  1. Convenience: Mutual fund investments can be made online without any need for tedious paperwork or documentation. You can monitor the market, choose a fund that best meets your financial goals, and invest as per your requirement. You can also switch between your mutual funds and rebalance your portfolio to take advantage of market opportunities or evade market volatility.
  2. Low investment: If you are eligible for mutual fund investment, you can invest an amount that suits your budget. You can invest as low as Rs. 500 a month through a SIP in a mutual fund scheme of your choice. You also can invest in a lump sum, but the SIP mode gives you the advantage of lowering your total investment cost while simultaneously unleashing the power of compounding.
  3. Professional fund management: Mutual fund schemes are managed by a team of financial researchers and experts. Hence, there is a high chance of portfolio optimization and maximization of returns as per your risk profile.
  4. Tax benefits: Mutual fund investments are subject to tax exemption under Section 80C. ELSS schemes have the shortest lock-in period and allow you to earn high returns with significant tax-saving benefits.

Conclusion

Investing in mutual funds early in life and through the SIP mode can offer significant long-term benefits. Log in to any verified, top-rated investment app to find, invest and track mutual fund investments at your convenience and ease. So, download Tata Capital Moneyfy app and start investing online today.

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