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10 Simple steps to start investing in Mutual Funds

Time to read: 6 mins | April 11, 2018

Mutual funds come in many shapes and sizes. Some options are low risk investment such as debt funds, while there are equity-based funds which are riskier. Then, there are Hybrid funds to offer a more balanced portfolio. If you are planning to invest in mutual funds, there are many parameters that need to be considered. Following are some simple steps to ensure fewer hassles while taking the decision.

Set your goals

set your goals

1. Prioritize specific goal within a specific time frame - It can be for your future house, car, higher degree in US, or a secure retirement.

2. Calculate the ‘goal cost’. Estimating the cost is one of the most crucial steps. And even if you are not clear on the goals right now, you should have a fair idea on the financial growth you desire. Do take inflation into account while estimating.

3. Select the Fund type: Based on your goals, invest in either short term (0-1 year), mid term (upto 3 years) or long-term growth (more than 3 years).

You can opt for higher risk and higher growth equity funds if you are investing for longer term and are not affected by the short-term upheavals in the fund value.

Know your risk appetite

risk appetite

4. Make a calculated judgement. That “Mutual funds are subject to market risk” is no secret. Generally, the riskiness of a fund is proportional to its growth potential.



5. One time or SIP? Depending on your cash flow and savings, decide if you want to invest a lumpsum or are happy starting small. SIPs are more popular as you don’t have to invest a large chunk of the savings at one go.

6. Estimate SIP amount. There are many SIP calculators that will help you derive the monthly SIP amount you need to invest.

7. Compare it against current and expected salary. Can you set aside the estimated amount every month on top of existing and projected expenses.

You might have to Replan in case you have either underestimated or overestimated.

With a fair idea on what kind of MF scheme suits you, it’s time to shortlist the funds which give the best returns in their category.

Shortlisting of funds

short list funds

8. Research on the schemes past performance over 3-5 years, especially at times of market swings. Look for ratings from the investing platform.

9. Select the right investing platform: Start investing in mutual funds within 10 minutes without going to the bank brand through online investing platforms. You won’t need a trading account or demat account before investing. Register here to start investing.

10. Get KYC done – This one-time process can be achieved by submitting relevant documents like address proof, PAN Card details, and photographs at the CAMS office. Having an Aadhar Card is an added benefit, as it allows for e-KYC.

Investing in mutual funds is like watching a paint dry. It takes time, but the results are satisfying. Use the below checklist to start investing in mutual funds.

  • Prioritize specific goal
  • Calculate the ‘goal cost’
  • Select fund type by determining term
  • Know your risk appetite
  • Mode of investment – Lumpsum or SIP
  • Calculate SIP amount
  • SIP amount Vs Salary
  • Research on scheme’s past performance
  • Select the right investing platform
  • Get KYC done

Disclaimer: This article has been authored by Dialogbox, a Mumbai based Content Design firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & Dialogbox shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.





The general rule of the thumb is to take higher risk and opt for equities when you are young, and gradually cut down on the risk factor by switching over to debt/hybrid funds, as you get older.







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