You’ve just got your first salary or committed to investment and as a young man in his early 20s, looking for where to invest your money. We’re here to give you some tips.
Investing in Mutual Funds can be considered as one of the safe and feasible options when looking to invest your hard earned money.
Many people fall into the trap of day trading in stock options where the high volatility can make or break your dreams – well, mostly break it.
Don’t be tempted to go into trading with the lure of making quick money. Instead, choosing mutual funds is a better and more rational option. Let’s see why and where you can get started.
Why You Should Invest In Mutual Funds
In a growing market and economy like India, investing in Mutual funds has many advantages. The market is mostly uptrend especially and considering a longer period of investment, one should be able to get good interest.
Mutual fund investment is generally a longer term commitment and as such, should be considered with a long term goal.
There are a host of funds with no lock-in periods. Then there are some with 1 year lock-ins. It’s upto you to choose the funds according to your goal.
One of the biggest reasons to invest in Mutual Fund is its flexibility. Be it in terms on your risk appetite or the funds or type of funds you choose – the choice is all yours.
Depending upon your goal and your current financial position, you can go for higher risk with higher interest rates. Or choose long term or short term according to the objective of your investment.
Ease of transaction – be it purchase of funds or redemption, mutual fund transaction is pretty simple and straightforward. You can do it at the comfort of your home.
Investment in Mutual Fund is also in a way more practical than investing in real estate. You can redeem at your convenience while the same can not be said about holding a real estate property – because you need to find a buyer.
Investing in MF through easy to use Mobile App
It’s the age of Mobile Apps and one need not open their laptop or computers to get started investing in Mutual Funds.
We have no affiliation but we’d recommend ETMoney App by Times Internet Limited for it’s ease of use.
This is perhaps one of the most useful apps although if you look up online, you will find a host of other investment apps and bank’s own apps through which you can invest.
Signing up/in is easy using your email account. You can then get started right away be selecting which funds from the various options – Tax Savings, Equity, Debt, Hybrid or by type of funds or houses.
Some of the Best Mutual Funds to Get Started With
That said, let’s take a look at some of the best Mutual Funds you can start your investment with. We will suggest mostly in the Small and Mid Cap funds as that’s where at the current Indian Market, they perform pretty well.
This is not to say the large cap funds aren’t performing well.
Mid Cap Funds Through One Time Investment
These below funds are selected through their past performance on a 3 year investment. They give the gist of how investor’s money grow and you can consider looking at them.
1. Motilal Oswal Midcap Fund
With a ROI (return on investment or rate of interest) coming out to be more than 41% per annum in the past three (3) years, this Midcap Fund is appealing to a lot of investors. If you invested Rs.10,000 3 years ago, your money today would have been more than Rs.28,300.
2. Quant Midcap Fund
This is another mid cap fund which gives more than 40% ROI per annum in the past three years. With this fund, your investment of Rs.10,000 would have turned Rs.27,900+ by now, which is pretty impressive.
3. PGIM India Midcap Opportunities Fund
Another mid cap fund with 40% plus return per annum in the past three years comes from PGIM India. This fund would have turned your money to Rs.27,600 plus in the last three years.
Besides above three, there are other decent funds with handsome returns such as the SBI Magnum Midcap Fund and HDFC Midcap Opportunities Fund.
You can check out the full list of funds and sort them with ROI percentage, duration of investment, type of investment that is SIP (Systematic Investment Plan) or One Time Lumpsum.
Small Cap Mutual Funds to Invest In
Apart from the above mid cap funds, there are numerous outperforming Small cap funds you can consider if you have some money to invest in.
1. Quant Small Cap Fund
This is by far the best performing Small cap mutual fund in the past three years. Would you believe that it gave an outstanding 62% ROI on a one time investment for the past 3 years?
Imagine turning your Rs.10,000 into some Rs.42,000 in three years with this fund!
2. Nippon India Small Cap Fund
This particular small cap fund came second with ROI at 49% plus anually. This is still better than most mid cap fund if you only look at the ROI percentage and is definitely one you can consider if you’re looking to invest.
3. HSBC Small Cap Fund
With an ROI hovering at around 47%, the HSBC Small Cap fund is no less performing. That’s why it makes it to the top 3 in terms of ROI in today’s list.
Besides these, you can also consider Canara Robeco Small cap fund, ICICI Prudential Small Cap fund or the HDFC Small Cap Fund which gives pretty decent ROI in the past years.
Disclaimer: All investment advisors always points out that the Mutual Fund investments are subject to market risks and the past performances may not be used as the sole means to select the funds.
This is true, as market underperform, you may find your investment underperforming and not giving the desired interest.
However, with a longer term perspective, it should nonetheless be one of the safest investment (well, not safer than Fixed Deposits).
Deposit and Withdrawal (Or Purchase and Redemption)
With ETMoney App, it’s pretty straightforward. You can authorize and link with your bank account that will allow you to directly deposit from your linked bank account.
Then proceed to find the funds you want to invest in, check the details such as lock-in period, type of fund and investment such as SIP or one time. Then proceed to invest.
Make payment from your linked bank account. In the next 24-48 hours, you should get allocation of the amount purchased.
You will then be able to track from your app how much is your investment at any given time.
Withdrawl or Redemption is also easy. From your investment, go to redeem and select the amount in allocated units or amount in value (money).
Redemption takes about 3 days to complete and you should see the money in your bank account in upto 5 working days.
Conclusion
As you can see, this is a very short article on the basic idea of investment in mutual funds and how you can get started.
It is not detailed but we hope that you find all the information you need to get started.
Why we mentioned ETMoney App particularly is because we have tested it and found it to be very easy to use and for other youths out there looking to get to the actual experience of investing in Mutual Funds, there is no better place to get started.
We hope you like our guide. Should you have any query, do let us know in the comments below. We will address them to the best possible extent and knowledge we have. Cheers!
