Do you have excess money lying around? What do you do of this amount of cash? Do you keep it idle in your bank savings account? Or do you prefer to invest it in investment options that has a higher potential to offer higher returns than the traditional bank savings account. You can choose to invest in mutual funds. Note, there are different types of mutual funds to cater to different investment needs of investor. So, if you are looking to invest your excess savings in mutual funds, liquid funds or money market funds would be a good investment bet. These mutual funds investment plans invest in short-term securities that have a low risk profile and short-term maturity. Now, that you know where to invest your savings, do you know how to invest in mutual funds? If you don’t, do not worry, we aim to answer the same in our article. If you do know, this might be a good revision for you. Keep reading.
How to invest in mutual funds?
To begin your investment journey in mutual funds, you must first do your research and find the apt fund house and liquid fund or money market scheme where in you wish to invest your surplus amount. If you are unsure about the same, you might consider taking advise from a professional such as mutual fund expert or mutual fund advisor who can help you in short listing the right fund houses and mutual fund schemes for your investment portfolio. You can choose to invest in mutual funds online simply through an online investment platform or by filling out a purchase form. Note that certain fund houses or AMCs (asset management company) require a particular higher investment amount from their investors to invest in liquid funds.
Costs associated with mutual fund investments
Another important thing to consider while investing in mutual funds is the cost associated with these investment vehicles. All mutual funds charge a fee known as expense ratio or total expense ratio (TER) to investors for the professional management it offers to its investors. The expense ration on liquid funds is comparatively low and capped at 1.05%. Even if an investor redeems their proceeds towards liquid funds within a week, the exit fee charged is the range of 0.006%.
If you wish to redeem your mutual fund investments, you must place a redemption request with your fund house either by filling a redemption application form or online from the comfort of your home. What’s more investors enjoy no exit charges on liquid funds provided they invest for at least a week. This is because the main purpose of these types of investments is to provide investors with a higher liquidity. Thus, investors can withdraw their liquid mutual fund investments any time they wish to, and an investor can expect the proceeds from the withdrawal of liquid fund schemes within 1 to 2 working days.
Hopefully, this has answered all your questions regarding how to invest your savings in mutual fund schemes. Happy investing!