Investing in mutual funds is as easy as shopping for your groceries on Amazon. With the digital evolution and the FinTech industry’s robust growth, investing in mutual funds has become very easy. Choose the appropriate application and start your investments within minutes. Here’s a guide that explains investing in mutual funds from a mobile application.
Choose A Suitable Mobile Application
Many fintech platforms offer mutual fund investing through mobile apps. It is prudent to select the right one that fits your requirements. You can select the mobile application by analyzing the features that it has to offer. Make sure the mobile application allows you to invest in mutual funds that help you realize your goals, reviews your investments and suggests timely rebalancing strategies. Furthermore, the mutual fund app must assist you with tax-optimized withdrawals.
Create Your Profile
Upon choosing the right mobile application, you need to create your profile. You need to provide your basic details as well as details pertaining to your income, other investments, debts, and financial goals. Through your profile, the mutual fund app will be able to assess your risk tolerance level. The mutual fund app will ask you certain questions with respect to your investment horizon, investment amount, investment objectives, family details, and other information to assess your risk tolerance levels.
Select/ Create a Suitable Goal
Once you create your profile next, you can either select a predetermined goal on the mutual fund app or create a suitable goal that meets your financial needs. Mutual fund investments are always encouraged to do against a goal since the investments can help you create a corpus to achieve the goal. Therefore either select or create a new goal that suits your requirements and investment horizon.
Determine the Monthly Investment Amount/ Lumpsum Amount
After selecting/ creating a goal, you must determine how much amount you wish to invest towards it on a monthly basis or as a one-time investment. Investing on a monthly basis, i.e., through SIP, helps you save a small amount on a regular basis. Thus, you can create a large corpus over time through SIP investing.
Depending on your financial position and investment objective, you can either choose to invest through the SIP route or lump sum in mutual funds.
Review the Suggested Investment Portfolio
Depending on your inputs, i.e., your profile details, financial position, other investments, debt position, investment goals, and other details, the mutual fund app will suggest a suitable portfolio for investment.
After analyzing your investment horizon, investment amount and risk tolerance levels, the mutual fund app will suggest a well-diversified portfolio that will help you achieve your goal. The well-diversified portfolio will consist of the right asset allocation mix and sector exposure. Thus you will be able to achieve your goals by diversifying your risk.
Complete your KYC
Upon reviewing the suggested portfolio, to proceed, you will have to finish the KYC process. Upload the necessary documents and digitally complete your KYC within minutes. Most mobile applications have started doing KYC online. The e-KYC process is quite simple and can be done within minutes. All you have to do is keep the required documents handy and finish the process to start your mutual fund investments.
Complete Investing and Step-up Bank Mandate
After becoming KYC compliant, you can start investing the desired amount into the mutual funds by doing a bank transfer.
Make sure you are investing in a disciplined manner and do not deviate from the investments. Skipping, pausing or stopping your SIPs will delay your goal timelines. Thus have a disciplined approach towards your mutual fund investments.
To complete the investing process, you will have to set up a bank mandate to automate your SIP investments.
Review and Track
After completing your investment process, make sure you are tracking your investments on a regular basis. It is prudent to keep track of your investments and review them periodically. In case of continued underperformance, you may want to consider rebalancing strategies to be able to generate significant returns. Reviewing and tracking your investments is a very important step. You can review your investments every half yearly or yearly, depending on your convenience and requirements. The mutual fund app will give you a summary of your investment and the performance break-up of each fund.
While reviewing and tracking your investments, you may see that some funds are giving exceptional returns while some may be underperforming. Analyze the reason for underperformance. In case of prolonged underperformance, you may have to rebalance your investments in that fund. This process may be tedious for a retail investor. Therefore you should select a mutual fund app that will help you rebalance your portfolio from time to time based on the performance of the funds. When your mutual fund app is suggesting rebalancing strategies, you must consider them and rebalance accordingly to keep up with your goal progress.
Tax Efficient Withdrawals
Also, you need to ensure that the mutual fund app will help you with exiting your mutual fund investments. Once your goal is achieved, or you are nearing your goal tenure, you should be able to exit your mutual fund investments without any hassle. The mutual fund app must suggest tax-efficient withdrawals to maximize your returns. Therefore even though your investments are performing well, if the goal corpus is achieved, it is prudent to exit the mutual fund investments as per the app’s suggestions.