Simplifying Investments: Access the Right Information8 min read
Picking the right mutual fund can be an exciting and daunting process for many people, especially those who are new to investing. People always keep hearing the same advice from seasoned investors around them to get their foot in the door through Mutual Funds, but making the right choice is just as important, and we at Paytm Money ensure that each of your investments in Mutual Funds is safe, reliable, and transparent.
What are Mutual Funds?
Mutual funds are financial instruments that pool the funds of many investors like you to invest in a variety of securities, including stocks, bonds, and other assets. Professional investment companies or fund managers who act as the investors’ agents manage them.
You purchase shares or units of the mutual fund when you invest in one. A proportionate ownership interest in the underlying securities held by the fund is represented by each share. The portfolio performance of the fund determines the value of your investment.
Why to invest in Mutual Funds?
- Professionally managed funds: Mutual funds are managed by professionals, with years of experience of market and investments. This takes away the efforts and time put in by investors in researching the market, timing it right, etc.
- Diversification of portfolio: Typically, mutual funds invest in a broad range of securities, distributing the risk among several businesses, industries, and asset classes. By reducing the risk of any one investment on the entire portfolio, diversification improves. This also enables you to invest in a wide variety of sectors, industries and not rely on returns from only one.
- Liquidity on the go: Liquidity lets users purchase or sell shares on any business day. At the end of each trading day, the fund determines its net asset value (NAV), and you can make transactions using that NAV price.
- Achieving investment goals: Mutual funds are built with definite investing goals in mind, such as capital growth, income creation, or a combination of the two. A fund can be chosen by an investor based on their appetite for risk and monetary goals.
Keeping this in mind, we urge each investor to carefully consider and evaluate the Mutual Fund they have chosen to invest in. With the benefits listed above, it’s crucial for investors to do their own research, since Like all investment avenues, mutual funds also carry a certain risk. They may hold the potential to give you some returns on your investment, but mutual funds do not guarantee any returns.
With full transparency on key parameters revolving around Mutual Funds, we make sure investors are able to find all the required information in one-go before starting their investment.
Starting your Mutual Fund Journey with Paytm Money
With the plethora of options to choose from, we at Paytm Money have tried to reduce decision fatigue with our investors and built an easy to understand, quick to invest Mutual Funds’ screen with all the categories available to the user in one quick glance.
Based on their financial goals, risk appetite, and minimum investment criteria (if any), investors can easily get started based on their preferences.
At Paytm Money, we provide clear and transparent financial information regarding each mutual fund to make it easier for investors to start investing.
In each category chosen by the investor, we provide a list of Mutual funds they can invest in that aligns with the main objective of the particular category.
Along with this list, investors can first sort the funds based on their returns as well as category returns; this is the first piece of information we urge investors to leverage to choose the right mutual fund from the list.
Once investors have selected a Mutual Fund, this is where the in-depth analysis of the Mutual Fund begins, with which Paytm Money helps investors from end to end.
Each Mutual Fund has two key pieces of information that are highlighted: the type of the Mutual Fund (Equity, Debt, Balanced, or Tax Saver), as well as information on the industries and firms where the majority of investments are made by them. This aligns well with the user’s goal for investment as well as the sector they want their money to be invested in, the most.
In the overview section of the fund details, our investors can get a quick glance of the Fund NAV from the last 1 month to a period of 5 years. The NAV per unit of a mutual fund scheme serves as a performance indicator. The NAV per unit is calculated by dividing the market value of the securities in a scheme by the total number of units in the scheme as of a particular date. The NAV calculation is significant because it provides us with the value of one share of the fund.
Our return calculator lets you make the right decision swiftly and provides an overview of how your money will grow if parked in a fixed deposit, bank account, or other platform. By changing investments and the duration, investors can also determine for how long and how much they should invest in a specific fund to reach their financial goal. This calculator ensures whether this Mutual Fund is the right fit for their needs or not.
For evaluating the risk appetite of an investor, a mutual fund’s risk is graphically represented by the riskometer. The graph is created in accordance with recommendations from the Association of Mutual Funds in India (AMFI), as per guidelines from SEBI.
Our riskometer has been split into six risk-levels to make sure investors understand the risk they are about to take while investing their principal.
Here’s how we have categorized the risks based on the risk-appetites of investors:
We also recommend investors go thoroughly through the fund information provided for each mutual fund. This section especially consists of the fees, charges, and taxes, which are crucial to understand before investing.
We recommend our investors make a decision after going through the following details:
- Expense Ratio: The expense ratio is a percentage used to indicate how much you are forking over to the AMC to manage your investments. Investors would want this to be as low as possible, so as to maximize their profits.
- Exit Load: The fee levied at the time of leaving a mutual fund scheme is referred to as an exit load. Investors are only obligated to pay this fee if they withdraw their money quickly. This is done to prohibit cash leaving fund houses quickly and without delay.
If our investors are sector/companies agnostic and have done their prior research and wish to invest their funds primarily in a few sectors/companies, our quick overview through scheme holdings provides that summary to ensure our investors have transparent knowledge of which funds they are investing in and where their funds will ultimately be directed.
We recommend that only after going through each and every section of a Mutual Fund, investors make a decision about whether to move forward with the investment of their hard-earned money.
Investors can either invest once or start their SIP with a few easy clicks.
As we always say, “Mutual funds are subjected to market risk.” – we highly recommend our investors perform their due diligence and market research to remain safe and only invest in the most trusted funds through our platform. Our aim at Paytm Money has been to bring transparency and simplicity to all funds available in the market, being the one-stop platform for all research and, hence, ensuring our investors achieve their financial goals, and make the right choice.
Disclaimer: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. This content is purely for informational purposes only and is in no way to be considered as advice or a recommendation. Paytm Money Ltd SEBI Reg No. Broking – INZ000240532. NSE (90165), BSE(6707) Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi – 110019. For complete Terms & Conditions and Disclaimers visit: https://www.paytmmoney.com.
Written By: Ananya Nandan | Product Manager | Paytm Money