How to Invest in Mutual Funds — Step-by-Step

• KYC: PAN, address proof, CKYC/Video KYC, and FATCA declaration as applicable.
• Where to invest: AMC websites, RTAs (CAMS/KFintech), brokers, or compliant investment platforms.
• Bank & mandate: Link a bank account, set up e-mandate/auto-debit, and add nominee details.

• ≤ 3 years: Liquid / Ultra-Short / Money Market / Short-Duration debt funds for stability and liquidity.
• 3–7 years: Hybrid (Balanced Advantage / Aggressive Hybrid) to ease drawdowns.
• 7+ years: Equity funds (Index, Large & Mid, Flexi-cap, Multi-cap). Mid/Small-cap needs higher risk appetite.
• Optional: International funds (subject to limits) for diversification.

What it is: Auto-invest a fixed amount every month into chosen schemes. Helps average purchase cost and build discipline.

When to use: Salaried cashflows, long-term goals (education, retirement), or when you want to avoid timing markets.

Pros: Habit-forming, rupee-cost averaging, easy to step-up yearly.

Consider: SIPs don’t guarantee profits; equity NAVs can be volatile. Keep SIPs running through cycles.

What it is: Invest a larger amount at once. Best when you already have surplus funds (bonus, asset sale).

When to use: Long horizon, strong conviction, or when valuations are reasonable; otherwise consider phasing via STP.

Pros: Immediate market participation and full compounding runway.

Consider: Entry timing risk; mitigate by splitting into 3–6 tranches or using STP from a debt fund.

1. Is SIP better than lumpsum?
   SIP builds discipline and averages cost; lumpsum gives full market exposure immediately. For long horizons, both can work—choose based on cashflow and risk comfort.
2. Can I pause or change my SIP?
   Yes. Most platforms allow pause/modify (amount/date) or stop. You can start a new SIP in the same or different scheme anytime.
3. What is NAV?
   Net Asset Value is the per-unit price of a mutual fund scheme calculated at day-end based on portfolio value.
4. Are mutual funds safe?
   They are regulated, but market-linked. No guarantees. Match category to horizon and diversify.
5. What is exit load?
   A small fee charged if you redeem within a specified period. Check scheme info for load and period.
6. What documents are needed to start?
   PAN, address proof, photo; CKYC/Video KYC; bank details and e-mandate. FATCA declaration may be required.
7. How many funds should I hold?
   Keep it simple: 1–3 core funds per goal are usually enough. Too many funds = duplication.
8. When should I rebalance?
   Review annually or if weights drift materially (e.g., ±5–10%). Rebalance to restore target allocation.
9. What is STP/SWP?
   STP moves money periodically between schemes (e.g., debt → equity). SWP withdraws fixed amounts (e.g., for retirement income).
10. Can I invest for my minor child?
    Yes. Investments are in the child’s name with guardian operations. KYC and documentation apply; update on majority.
11. Should I stop SIPs in a falling market?
    Generally no. SIPs aim to buy more units at lower prices; stopping may hurt long-term goals.
12. How do I pick an equity fund?
    Use simple, diversified categories (index/large & mid/flexi/multi-cap). Check consistency, mandate, and risk metrics over full cycles.
13. What about debt fund risk?
    Stick to categories that match horizon; prefer high-quality portfolios for short-term goals; watch interest-rate sensitivity.
14. How are capital gains taxed?
    Taxation differs for equity vs debt and by holding period. Check current rules before redeeming.
15. What if I need money before my goal?
    Maintain an emergency fund outside MFs. For planned needs, shift to safer funds 2–3 years before the goal.