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Mutual Funds for Beginners

Updated on March 16, 2023 , 6405 views

investing in Mutual Funds for the first time? Good choice. Mutual fund investment offers an advantage of diversification and easy liquidity. But there is a process to be followed while Investing for the first time. Also, you need to invest in best mutual funds so that it gives you the motivation to invest more. Your fund investment should be simple, useful and easy to implement. There are both qualitative and quantitative parameters to look for.

Mutual Funds for Beginners

What are Mutual Funds?

A mutual fund is formed by pooling in the money by a large number of investors. This money or fund raised is then managed by a fund manager who specialises in investing that money in different financial products.

Now that you know, what are Mutual Funds, let's look what process you need to follow to invest in mutual fund for the first time.

Beginners Guide to Mutual Funds

As a first timer investor, there are certain guidelines you must follow before picking any funds to invest.

1. Define your Goals

It is very important to define a clear goal for the investing in mutual funds. You must decide what kind of investment are you looking into. Is it a short-term or a long-term investment? What will be the time period for the investment? As a result of such precise planning, it becomes easier to map the road ahead. Another crucial step to follow is to avoid impatience or overexcitement. You should stick to your objective and avoid getting lured by certain funds (herd mentality or any other bias), without proper knowledge.

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2. Calculate your Risk Appetite

With every investment, comes a risk. Thus, it is important to understand the risks involved. Every investor must assess risks involved with the help of risk profiling. There are various criteria concerned with risk profiling. Age, Income, investment horizon, loss tolerance, experience in investing, Net worth, and cash flows. Each of these criteria contributes to your risk appetite. A good risk profiling helps you in selecting a mutual fund which best matches your needs.

3. Choosing the Right Mutual Fund

We are finally getting down to the business. After defining clear goals and an informed risk profile, selecting a Mutual Fund which caters all your needs becomes easy. There are many Types of Mutual Funds schemes available in the Market. For investing in mutual funds, you should consider the ratings given by the rating companies. ICRA, CRISIL, MorningStar, ValueResearch, etc., are some of the notable rating systems which will provide you with the best Mutual Fund to invest in. Along with ratings, one must also look for the returns provided by the fund.

However, to make the fund selection process easy for you, we have shortlisted some of the Best Mutual Funds to Invest:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2022 (%)Sub Cat.
Principal Emerging Bluechip Fund Growth ₹183.316
↑ 2.03
₹3,1242.913.638.921.919.2 Large & Mid Cap
Franklin Build India Fund Growth ₹70.3758
↑ 0.43
₹1,199- Sectoral
UTI Dynamic Bond Fund Growth ₹26.0294
↑ 0.01
₹3691.32.211.610.25.610.1 Dynamic Bond
IDFC Infrastructure Fund Growth ₹24.921
↑ 0.21
₹619-1.5-0.811.634.26.71.7 Sectoral
UTI Banking & PSU Debt Fund Growth ₹18.4511
↑ 0.01
₹5321.12.410.67.55.410.3 Banking & PSU Debt
PGIM India Credit Risk Fund Growth ₹15.5876
↑ 0.00
₹390.64.48.434.2 Credit Risk
SBI Small Cap Fund Growth ₹108.492
↑ 0.45
₹15,292-6.8-5.67.23313.88.1 Small Cap
ICICI Prudential Long Term Plan Growth ₹30.7364
↓ 0.00
₹6,4441.435. Dynamic Bond
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 31 Dec 21

4. Asset Management Company

Choosing a right asset management company is also very important while Investing in Mutual Funds for the First Time. Track record of the asset management company (AMC), the age of the fund and the track-record of the fund are also essential factors while finalising on investing in mutual funds. Thus, choosing the right mutual funds for the first investment links both the qualitative and quantitative measures.

There is no shortage of knowledge about investing in mutual funds. Sufficient information will only help at the time of investment and stops you from being a victim of misselling. The decision of investing in mutual funds for the first time has to be a well-informed and well thought. This will only encourage you to invest more. This can be your first step towards a gradual wealth creation.

How to Invest in Mutual Funds Online?

  1. Open Free Investment Account for Lifetime at

  2. Complete your Registration and KYC Process

  3. Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

    Get Started

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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