For retail investors, there are not many of the options available in the market. The options where one can invest a small amount do not offer a good return and where he can get good return the risk is high. In such a case, one needs to check a few of the options before going for any of them. As per the current market and available options, the mutual fund is the best one. It is considered as the best and safest option. One can invest with 500 per month also in this option.
What is a mutual fund?
A mutual fund is an option of investment where small, medium and large investors invest their amount in different schemes. This amount is collected and invested in the share market by the company. To manage this investment, there is a specific expert who is known as a fund manager. It is his responsibility to invest in shares of specific companies and earn more return for the investors. The return earned by the company is distributed among the mutual fund holders after deducting its expenses. The investment is divided by the units which, offers the net asset value, and accordingly, the amount is shared with each unitholder. The companies have various schemes according to which the investor can invest in any of the scheme. There can be long term, medium term or short term. The investor needs to check the term and option of investment where the company will invest the amount so that he can have an idea about the return.
If the scheme is on-going one can check the return offered by the company in past 6 months or one year and accordingly he can decide if the investment in this option will help him get a good return or not. After a thorough analysis of the fund, one can know if he can go for short term or long term with a concerned plan.
The options for investment:
There are primarily two options with the help of which one can invest. There are a systematic investment plan and one-time investment. Both of these options have pros and cons that one needs to know before investing. One can find the best MFs for SIP if he wants to go for investment in monthly mode. In this mode, the amount needs to be invested every month, which is debited from the bank account directly. There are certain dates offered by the company when the amount is deducted from the bank and credited to one’s folio. Hence the said amount is invested in the market, and one can get options such as growth and dividend.
In the growth option, the NAV of the unit keeps on increasing while in the dividend option, the amount increased is provided as a return to the investor. There are also two options in the dividend also which are, dividend payout and dividend reinvestment. In the dividend payout option, one can get the check as per the decided date while in dividend reinvestment, the said amount is also invested again in the scheme of the company.
Redemption or withdrawal:
After a certain period, one can also ask the company to pay back the required amount. One can ask for a small to full amount from the company. However, it is possible only if one has invested in an open-ended scheme or the period of lock-in for the close-ended option is over. In the case of redemption, one can get money to his bank account within 3 to 5 working days.
How to invest?
For those who want to find the best mutual fund for one time investment, it is necessary to have proper research. One needs to check the options and schemes well before going for the investment. The mutual fund one-time investment must be chosen wisely as one may not gain much profit if it is wrongly chosen. One also needs to keep the NAV monitored while going for the same. Before getting the same redeemed one needs to be sure about its lock-in period and units available. One must know what can be the NAV and how much amount he may get at the end of a period.
The investment process:
In this system, there are offline as well as online options for easy investment here. One can go for the offline investment option if he is not much aware of the online option. He needs to hire a broker and provide him check with required documents that need to be submitted to the concerned company. In the online option, one needs to log on the site of the company, choose the option and submit documents. He also needs to transfer the fund online via card or net banking or any other option for fund transfer.
Benefits of mutual fund:
It is much necessary to know the benefits of mutual fund investment. One can invest a small amount here, and in the majority of the cases, one can earn a good return on the amount invested. The system of a mutual fund is also completely transparent and trustworthy that one can be sure about his money with the concerned company. As there are many companies in the market, it is necessary for the companies to offer the best return on the investment of the client, and hence, they need to perform well. In addition to all these benefits if one goes for the investment in ELSS, he can also save good amount as tax benefit also. This amount can be paid in an instalment when the investor invests the amount in ELSS via SIP. If one invests in a scheme which is open-ended, he can take benefit of short time also and withdraw all the units when he can see that he has got a good return in a short time also.
Hence there are lots of benefits of investing in a mutual fund, but the only condition is one needs to wait for a considerable period and find the right company, scheme as well as option to get the best return on his investment.