The first question to come to your mind if you don’t know about mutual fund services is perhaps what these funds are. Such a fund is a kind of investment vehicle where the money collected from multiple investors is put in various securities like bonds, stocks, money market tools, etc. If you stay invested in a well-chosen fund, you can expect to earn good returns.

That being said, here are the answers to 5 other commonly asked questions about mutual funds.

How to choose a suitable mutual fund?

You need to keep these factors in mind to choose a fund accordingly:

  • Your financial situation
  • Your expected returns
  • Your risk appetite

If you wish to earn high returns, it’s best to invest in mutual funds with a moderately high or high risk. An example is an equity fund. A gilt fund, on the other hand, is an example of a low-risk fund. Remember to assess your financial situation to determine whether you can take the risk. You can choose a good asset management company offering mutual fund services to check the risks associated with different kinds of funds, and pick a suitable one.

What is risk appetite and how to calculate it?

Risk appetite refers to your willingness and ability as an investor to tolerate any losses of your investment.

You can easily determine your risk appetite using a risk analyser calculator, and accordingly, decide how much to invest in a mutual fund.

How to create a financial plan to meet a specific goal?

For that, consider using a mutual fund goal calculator or goal planner online on an asset management company’s website. The planner not just helps you set a financial goal but also build a concrete plan to achieve it.

What is SIP in mutual funds? What are its benefits?

A systematic investment plan (SIP) is a way to deposit a fixed amount in a mutual fund at certain regular intervals, such as, biannually, quarterly or monthly.

It’s good to invest in a fund through SIP to build a disciplined approach towards investing regularly to achieve a long-term goal. You can earn good returns after years due to the benefit of compounding. Plus you can ward off risks associated with market volatility through rupee cost averaging. It works by allocating you more units when the stock prices fall and fewer units when the prices spike up. Plus you can conveniently invest through automated transfers from your account to your chosen scheme. Once your finances improve, you can step up your investments by a certain percentage at the chosen intervals to further boost your returns manifold.

What is an SIP calculator?

It works as a simulator. You can use it on the website of an asset management company to estimate the returns from your investments made through an SIP plan.

Make sure that you have KYC compliance to start your investments and enjoy the benefits of mutual fund services. It verifies your identity as an investor without ill motives to control money laundering activities.