Investing directly in mutual funds allows investors to potentially save on commissions and gain more control over their portfolio. For Indian investors, a direct investment approach can help align contributions with financial goals while focusing on long-term growth potential.
Steps to invest directly
- Identify your investment goal: Before investing, define your financial objectives, time horizon, and risk tolerance. This will guide the choice of fund categories such as equity, debt, or hybrid schemes.
- Choose the right mutual fund: Review the fund’s historical performance, expense ratio, risk metrics, and portfolio composition. Keep in mind that any historical information or past data should not be taken as an indication or guarantee of any future performance.
- Complete KYC formalities: Know Your Customer (KYC) compliance is mandatory for direct mutual fund investments in India. Investors must submit identity and address proofs to complete the KYC process.
- Select the investment mode: Investors can choose to invest as a lump sum or through a systematic investment plan (SIP). SIPs allow regular contributions, potentially reducing the impact of market volatility.
- Monitor and review the portfolio: Regularly check the fund’s performance and compare it against your financial goals. Rebalancing may be necessary to maintain desired asset allocation and optimise potential returns.
Considerations when investing
- Expense ratio: Lower fees in direct plans can improve potential returns over time.
- Diversification: Spreading investments across fund types helps manage risk and smooth returns.
- Risk profile: Align investments with risk tolerance and investment horizon to manage potential volatility.
Investors seeking direct investment in mutual funds may explore schemes offered by Bajaj Finserv mutual fund, which provides options across equity, debt, and hybrid categories. Consulting a financial planner or investment advisor can help design a portfolio aligned with personal goals and risk appetite.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
