Beginner's guide to invest your money in Mutual Funds - Money Market

Are you ready to invest ?

Before going to invest in Mutual funds, you should be clear whether you are really in the state to invest. Investment should never be made in hurry and in tight financial situation where you don't have surplus of money but you find investment lucrative. Also, depending upon types of return you need, you can easily find out what type of mutual funds you should invest in. If you want regular income and minimal risk then debt funds are good while on the other hand if you are looking for higher growth then as already explained, you should go for equity funds. There are further many points you should keep in mind while investing in mutual funds.

Always, be clear that how much you want to invest. It is never good idea to invest your money which is there for short term with and you want to take advantage of it. Reason is simple that there is no definite guarantee whether you are going to make significant profit in predefined time period. However, mostly it is considered safe if you are investing for long term specially in equity funds. You should have atleast 3 years of perspective in mind while making investment in funds.


Also, you can have both kind of funds in your portfolio, as per your requirement of returns you need, you can decide the ratio of debt funds and equity funds you should hold.

To explain this further with example, say you just had nice profit in your business, now you have cash in surplus and you are thinking about to invest. Here, investing in equity market or stock market directly is not an option as you are busy in your core business and hence don't have time to know the if and buts of stock market which requires lot more attention than any other investment in general. So, you are looking at mutual funds as better bet. However, everything looks good here but one should keep in mind that though mutual funds are good, generally returns are game of long term. Hence, on the other hand if invest the profit you have just earned in your main business,can further to enhance your business then it would be good idea to invest it in core / main business instead of investing in MFs. This all simply means that only invest money when there is no other better use of money, ofcourse investing in Mutual Funds is far better than keeping them in your saving accounts or even in FDs.

So, this sums up for your risk taking ability. One next page we will discuss ways a fund management company work which will tell you about the fund investment nature of that company.