A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.
What are the different ways to invest in mutual funds?
There are several ways to start investing in a mutual fund scheme.
You may invest in mutual funds by submitting a duly completed application form along with a cheque or bank draft at the branch or service centres for designated investors (SAIs) of mutual funds or the registrars and transfer agents of their respective mutual funds.
You can also choose to invest online through the websites of the respective mutual funds.
In addition, you can invest with the help of/through a financial intermediary, i.e., a mutual fund distributor registered with AMFI OR choose to invest directly, i.e. without engaging or routing the investment through any distributor.
A mutual fund distributor can be an individual or non-individual entity, such as a bank, brokerage firm, or provider of online distribution channels.
You can choose to invest online, as platforms these days have all the necessary guarantees to ensure safe investments. It’s really more about comfort and convenience.
