Three things that first time investors in mutual funds should know

Three things that first time investors in mutual funds should know

What should beginners keep in mind before making their first investment?

It’s never too late to start investing. If you are a new investor and thinking of making some good investment decisions by taking financial market's exposure, you should ideally start your investment, the best time to start is today.

If you are interested in taking advantage of returns generated by equities and are a beginner, it is better to take exposure through mutual funds. However, before making any investment you need to keep a few things in mind.

Work with a professional financial advisor: Do not start your investments without the help of a professional financial advisor.  Your journey in the world of investing should ideally begin with the first step of identifying the right financial advisor. Though you have the option of bypassing an advisor and some people may recommend you doing it directly, this could lead to mis-steps and put your long term wealth creation process at risk. Don't pinch the pennies but focus on how you can create long term wealth.

Know your financial goal: Make your investment only when you can link it to certain financial goals. Also, the goal should be measurable, realistic and achievable. If you are not able to figure one out, you should be clear on how much wealth you are targeting to create in a given time period.

Analyse the risk-taking capacity: Being a new investor, one should analyse their risk-taking capacity and accordingly select the scheme. You should know that there are several types of mutual funds available catering to one’s risk appetite. Therefore, it is very necessary to take advice from a financial adviser/investment adviser.

Know the options available: Lump sum or SIP? Dividend or Growth? It becomes very important when you are defining your financial goal. While aiming to fulfill a goal where you need to generate a huge corpus, you should opt for growth option going through SIP mode of investing, whereas if you need some profits from time to time as and when a company gains from the market, you should select dividend option. Also, lump sum strategy can be selected once you want to gain from the market but then, you should take help from the adviser.

Have all your documents ready: Investing for the first time, you need to complete your KYC (Know Your Customer) with the KYC Registration Agency (KRA), which is an agency registered with SEBI under the Securities and Exchange Board of India. Having a PAN card is also necessary.

Happy Investingt
Source:Moneycontrol.com