How to Invest in Mutual Funds in India for Beginners

Mutual Fund investments are among the most popular investment avenues in India. If you are a beginner, looking to invest your money in Mutual Funds, then understanding the fundamentals of these funds is necessary.

What are Mutual Funds?

A Mutual Fund is a diversified basket of stocks and bonds, which are managed by professionals of Asset Management Companies (AMCs). They are an indirect form of investment, where your funds are invested across a wide variety of asset classes. A key highlight of Mutual Funds is the Systematic Investment Plan (SIP), wherein you can invest as little as Rs 500 each month.

Types of Mutual Funds:

There are three types of Mutual Funds:

Equity Funds:

These funds are primarily invested in equity shares of various companies. If you are looking for long term gains, generating high returns, and are comfortable with moderate to high market risks, then you should invest in these funds.

Debt Funds:

These funds predominantly invest in government securities, like treasury bills, bonds and corporate deposits. These are best suited for those who don’t want to take market risks and are comfortable with moderate returns on a short term investment horizon

Hybrid Funds:

These funds are invested in both equity shares and debt securities for both asset classes and involve low to moderate risks.

How to Invest in Mutual Funds

  • Assess your financial goals and risk appetite:

    Before investing in Mutual Funds, you must assess the level of risk you can take and your financial goals, whether it is for the short term, mid-term or long term, and invest accordingly.
  • Open an account with a fund house:

    The next step is to have an account with a fund house of your choice and complete your KYC.
  • Portfolio creation:

    You need to create your Mutual Fund portfolio and analyze the performance of various schemes, and zero in on those which are in sync with your investment horizon and risk appetite.
  • Allocation of funds:

    After that, you must decide the amount which you can invest in your portfolio. You can choose a monthly SIP, and link it with your bank account so that the amount is automatically debited.
  • Review your portfolio:

    Lastly, you must regularly monitor your portfolio, and make changes if a particular fund’s performance is not up to the mark. Market experts suggest reviewing and balancing your portfolio at least once every six months to receive the best returns.


The benefits of Mutual Fund investment are as follows:

  • Convenient and flexible: In the present digital age, you can invest online in Mutual Funds instantly after completing KYC. Opening an account with a fund house is a paperless and hassle- free process.
  • Tax benefits: You can consider investing in tax-saving Mutual Funds, known as Equity Linked Savings Scheme (ELSS). Here, you can avail of tax deductions up to Rs 1.5 lakh in a year.


Thus, Mutual Funds are among the best investment avenues in India. If you are an investor looking for high returns from stock markets, you can consider investing in shares through a trusted and reliable broker like IIFL which provides unbeatable propositions, like free online Demat Account and Trading account. With IIFLs Demat Account and Trading Account, you can trade in equities, currencies, commodities and Mutual Funds on a single platform.