Things you should know before you start investing in Mutual Funds - 1

While investing in mutual funds, there are some basic terminologies and facts that you should know before you start your investment journey. So, let's cover it in this article.

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1.)No Demat Account Needed

For investing in mutual funds, all that you need is a valid pan card and a valid phone number. Although you can store the mutual funds units digitally in Demat account, it is not a criterion for investing in it.

2.)ELSS Funds

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All mutual funds do not qualify as an investment under income tax saving, for this, there is a special category of mutual funds known as Equity Linked Saving Scheme(ELSS) Funds. These mutual funds have a lock-in period which means you cannot withdraw your investment during that period.

3.)CRISIL Rating

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Before investing in any kind of mutual fund, please check the ratings of that fund. There are some credit agencies that continuously monitors these AMCs and provide a rating between 1-5(lower the rank better the mutual fund). One of them is CRISIL. We are providing the link for this website below.

CRISIL Mutual Fund Ranking

4.)Entry Load and Exit Load

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Some mutual fund companies charge a fee for purchasing a mutual fund(mostly 1-2%). It is known as Entry Load. Same applies when you withdraw your investment within a certain period from the date of investment, as specified in the Scheme Information Document. This is called as Exit Load. The timeframe varies according to different mutual fund. So, don't forget to check the entry load and exit load of your mutual fund.

5.)Expense Ratio

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The expense ratio is the annual maintenance charge levied by mutual fund companies for managing your investment. This ratio also includes marketing, advertising, management and registrar fees.Generally, it is around(0.5-2%).This ratio makes a lot of difference in long term investment.

How to invest in mutual funds?

You can start investing in mutual funds through any AMC website/app. There are many third-party apps like groww, ET money, etc. We are providing one mutual fund app link below.

Groww App. 

Hope you enjoyed the blog.

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