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  • How to Invest in Mutual Funds: The Beginners Guide

How to Invest in Mutual Funds: The Beginners Guide

Mutual funds are a great way to grow your money, assuming you invest and don’t just stash it under the mattress. The good news is that investing in mutual funds is easier than you think. Anyone can do it, even if you have a limited amount of capital to invest. 
If you’re reading this blog, you’re thinking about investing in mutual funds. This will be a big step for most people, but it will pay off in the long run. 
While stocks can be risky (and let’s face it – who wants to lose money?) Mutual funds offer great potential for growth once you know what you’re doing and have an excellent strategy in place.
What Are Mutual Funds?

A mutual fund is a type of investment in which a group of investors pool their money together to invest in stocks, bonds, or other securities.
Each investor buys shares in the fund, which represents their portion of the total funds. If the fund sees greater gains than expected, the investors see that growth as well, or they might get a bigger dividend.
Mutual funds are managed by a professional who decides which securities the fund will buy. This is in contrast to investing in individual stocks, where you would directly buy shares of a company and be responsible for monitoring its performance.
Diversification is one of the biggest benefits of investing in mutual funds. While you can diversify by investing in stocks directly, many people don’t have the time or the expertise to do so effectively. With mutual funds, you can get the benefits of diversification with a single investment.

 Start investing in mutual Funds 

How to Invest in Mutual Funds - Step by step

  1. The first thing to do is to decide what type of mutual fund to invest in. You can choose between equity funds, fixed income funds, or hybrid funds.
    1. Equity funds invest in stocks and usually carry more risk.
    2. Fixed income funds invest in bonds and can offer a steadier return. 
    3. Hybrid funds are a combination of both.
  2. Next, you’ll want to select the specific funds to invest in. Before you do, create a portfolio with the help of a financial advisor or read up on portfolio theory to get an idea of how funds work together.
  3. Once you’ve selected your funds, you’ll need to open an account. You can either open an account with the mutual fund company or with a brokerage firm. This is where you’ll store the funds and make the investment.

Which Mutual Funds Should You Start With?

The answer will depend on the amount of money you have available to invest. If you don’t have a lot of money to invest, you might want to start with a money market fund. These are low-risk and provide minimal returns. 
This is a good way to build confidence in your investing abilities before moving on to more risky investments. As you become more confident and have more money to invest, you can diversify your portfolio with a variety of funds. 
You should also consider what stage of your life you’re in, as different stages call for different types of investment strategies. If you’re in your 20s or 30s and have plenty of time to ride out any economic downturns, you may want to invest a larger portion of your portfolio in stocks. If you’re near to retirement and want to protect your assets, you may want to invest more conservatively.

Also Read - Markets Crashing – What’s going on and what to do?
Finding the Right Investment Firm

Once you’ve decided which mutual funds you want to invest in, you’ll need to find the right investment firm to manage your money. This is where the real work begins because there are thousands of investment firms that offer such services. 

You have to do your research to find the best possible firm for you. Here are some things to keep in mind as you do your research. 

  • Reputation - First and foremost, you’ll want to find an investment firm with a good reputation. An excellent reputation means that the firm has a lot of satisfied customers, and you can rest assured that your money is in good hands. 
  • Research - While reputation is important, it’s not the only thing you should consider. One needs to look into the research capabilities of different firms. 
  • Investment Offerings -Find a firm that specializes in several types of funds you want to invest in. Companies that offer a wide variety of investment options to their customers seem more credible.

Few Mutual Funds to Invest In 2022

Here is the list of some good mutual funds to invest in 2022:

  1. UTI Nifty Next 50 Index Fund
  2. HDFC Mid-Cap Opportunities Fund
  3. Nippon India Large Cap Fund
  4. Motilal Oswal Long Term Equity Fund
  5. SBI Magnum Global Fund


  • Mutual fund investments are subject to market risks, read all scheme related documents carefully. 
  • Above mentioned recommended funds are based on past performance as on the date of recommendation, and does not guarantee positive future returns

Wrapping up

Now that you’ve read this article, you have understood a lot about mutual funds and how to invest in them. Mutual funds are a great way to grow your money, assuming you pick the right funds and invest with a long-term perspective. 
Now, the question is, where do you start with the process of investing? The answer is to start with the basics. 

This includes understanding what mutual funds are, how they work, and which ones are best for beginners. 

You can take the services from the TradingBells - one of the leading stock broker firms that offers you consulting services regarding mutual fund investments.

They provide complete understanding of these concepts, and make you ready to get started on the path of investing success.

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