Mutual Fund Investment Guide for Beginners

What is Mutual Fund?

A Mutual Fund pools money from various investors and puts these funds into different assets such as equity, debt, gold, etc., depending on the specific scheme chosen by the investor. It is professionally managed and monitored by a fund manager whose goal is to generate returns for the investors. 

Example –  Srishti invests in Lxme’s Rs. 100 Equity Fund through a SIP of Rs.100/- monthly. This allows her to diversify her money across different companies that the fund invests in with just Rs. 100.

Let’s see what is mutual funds investment for beginners

Learn about Mutual Funds: What are the different types of Mutual Funds on the basis of asset class?

• Equity Funds – These mutual funds invest the pooled money from investors primarily in stocks of different companies. Compared to other investment options, equity involves a higher amount of risk, however, it’s a long-term asset class where the risk is mitigated when you allow time for your money to grow and aim at generating inflation-beating returns.

• Debt Funds – Debt funds tend to invest in fixed-income instruments such as corporate and government bonds and money market instruments. These are suitable for your short-term goal (less than 3 years) and are an essential part of the overall asset allocation of the investor.

• Gold Funds – Gold Mutual Funds are mutual funds that invest in gold and different gold-related assets including Gold ETFs on your behalf. They act as a hedge against inflation, market uncertainities and allow investors to invest in gold in a smart way. 

Explore Lxme’s Rs. 100 Equity, Debt and Gold Funds to begin your money journey today!

• Hybrid Funds – Hybrid Funds are a combination of funds of different asset classes, typically debt and equity. They balance and diversify your portfolio by distributing the risk and return.

Mutual Funds Guide: how to decide which Mutual Fund is suitable for you?

In order to decide which MF is suitable for you, a woman needs to determine her financial goals and her time horizon for achieving these goals. 

• If you want to achieve your goal within a year, then it’s categorized as an Ultra-Short Term Goal (Some such goals are emergency fund, birthday, anniversary celebration or paying off small credit card debt) 

You can invest in arbitrage funds,  liquid mutual funds which offer a high degree of liquidity and also generate a reasonable return.

• If you want to achieve your goal within 1-3 years, then it’s categorized as a Short Term Goal (Some such goals are buying a car, saving for a downpayment on a home or luxury shopping)

Invest in debt mutual funds or funds which are a mix of debt and equity to maintain an optimal balance of safety and growth. 

• If you want to achieve your goal in 3+ years, then it’s categorized as a Long Term Goal (Some such goals are planning for retirement, buying a house or planning for an international trip)

When your goal is for the long term, you can invest in equity funds, funds that are a mix of equity and debt or gold mutual funds as these funds aim to achieve capital appreciation over time.

Investing in Mutual Funds Guide – How to start investing in Mutual Funds for beginners?

Lxme makes investing simple yet powerful for you! Begin investing by following these 6 simple steps – 

Step 1: Download the Lxme app

Step 2: Create an account (P.s. it won’t take more than 5 minutes!)

Step 3: Click on the ‘Invest’ tab

Step 4: Choose from 10 expert-curated, goal-based mutual fund portfolios

Step 5: Select an investment method: SIP or Lumpsum

Step 6: Fill details & begin investing

In conclusion, as you have learn about mutual funds before selecting a mutual fund, determine your investment goals, time horizon, risk appetite, investment amount and investment method. Once you decide the time in which you want to achieve your goals, pick a mutual fund accordingly to achieve your financial goals! This was all about mutual funds investment for beginners.

Check out Lxme’s goal and time based portfolios and start investing today!

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