This depends on the type of fund you are investing in. Usually, the minimum investment ranged from Rs. 500 to Rs. 5000.

Every form of investment comes with a certain amount of risk. While advisors might tell you that the returns will be good if you invest for the long term, in reality, mutual funds are subject to risks and there is no guarantee for good returns. Thus, depending on the securities the fund is investing in, or the mix of securities chosen for a specific fund, the element of ‘risk’ varies substantially.

An asset that can be converted into cash readily is considered to have high liquidity. Mutual funds as an asset are very liquid. You can exit a scheme and fund monetized within a short period of time; this is irrespective of the fact whether returns are profitable or not.

If you are planning for a short-term investment, then equity investment might not be the right option for you. You can consider liquid funds or mutual funds which can give you around 7 per cent return before tax.

Essentially, it depends on your goal. Mutual funds have three classes, A shares, B shares, and C shares. The only difference between these is regarding the type of fees and expenses associated with them. Each class will invest in the same securities. Select a class that best aligns with your objective; be clear about your objectives and carry out your research regarding various kinds of fees associated with each class.

NAV (Net Asset Value) is the total value of assets in a mutual fund divided by the number of units of the mutual fund. This value is equal to the price of a unit. NAV is determined once a day.

There is a certain fee that you need to pay to your fund managers for administrative and other expenses. This fee is considered the expense ratio or the management expense ratio.

Through the Systematic Investment Plan (SIP) of the mutual fund, an investor can invest a fixed amount of money each month; a certain amount is deducted, say, for example, on the 10th of every month. On the other hand, in a lump sum investment, you invest an amount on a particular day.

Fund managers are considered to be efficient as they possess the knowledge to ensure that your funds are invested appropriately. But it is highly recommended to carry out a background check and understand how credible and efficient your fund manager is. It is also advisable to understand the rationale behind his strategies and not blindly agree with what he suggests.

If you invest in any tax saving scheme, you can claim tax deductions of up to Rs 1.5 lakh under Section 80C. These schemes are referred to as Equity Linked Saving Schemes (ELSS).

Mutual funds are definitely becoming a preferred mode of investment. Over the past, three years investments in mutual funds have almost doubled while bank deposits grew by about 34 per cent and there has been reallocation to funds in 2018. This is mainly due to the fact that deposit rates have considerably come down.

This largely depends on the time period. If you are investing for a longer period, then you must keep in mind that when the stock market is down, it will have a negative impact on equity. Make sure that the scheme that you have invested in is in line with your objectives.

In India, mutual funds have grown from being an alternative to direct equity investment.

Despite the high market volatility in 2018, investors remained confident in their investments. In February 2019, the SIP book size stood at over 8,000 crores.

Yes, non-resident Indians can also invest in mutual funds. However, it is mandatory for the investor to adhere to the Foreign Exchange Management Act (FEMA).

Some Mutual fund schemes have an exit load, and some schemes don’t. The schemes which have an exit load will incur a small charge if they redeem/withdraw their investments before the stipulated time. For example, a mutual fund scheme with an exit load of 0.25% for 3 months, will incur a charge of 0.25% if the investment is withdrawn before 3 months of investment. Please note that the same fund will not incur any charges if the investment is withdrawn/redeemed after a period of 3 months.

These funds invest primarily in debt and fixed-income securities and the rest money in Stocks. These funds have moderate risk as compared to pure Equity funds.

These funds invest primarily (above 65%) in stocks and the rest in debt and fixed-income securities. These funds have moderate risk as compared to pure Equity funds.

These funds take advantage of the differential pricing between stocks in the Cash market vis a vis the prices of the same stock’s future in the futures markets. Additionally, these funds park their money in short-term maturity debt securities and money market securities and hence have very low risk.

These funds invest primarily in Government Securities of the high term to maturity. Since these funds invest in government bonds there is no credit default risk on these funds.

These funds invest in Money market instruments and securities with very short term to maturity (lesser than 90 days). These funds are not impacted too much by interest rate movements and typically give very stable returns to the customers.

Lock in period is the time during which an investor can not withdraw/redeem his/her investments. Some mutual fund schemes like ELSS/Tax saving funds come with a lock-in period of 3 years as mandated by the government. This essentially means that the investments cannot be redeemed before a period of 3 years from the date of investment in any circumstances.

These funds invest in companies which have very capitalization on stock markets. For example Infosys Technologies Limited, TCS, Reliance Industries Limited etc.

Open-ended funds are those which can be purchased and sold anytime. Closed-ended funds can be purchased from the fund house only at the time of the new fund offering (NFO) and can be sold only once the period of the closed-ended fund has ended. Interval funds have periodic intervals specified by the funds when they can be purchased and sold.

These funds invest in companies which have Small or Mid-sized capitalization on stock markets. For example IndusInd Bank, Blue Dart, Eveready Industries etc.