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Are you right out of your college and looking to start a career professionally? It can be quite an exciting journey. While this could mean you are officially entering the era of youth, there are certain things that you can do to pave path for your growth, the most important being financially independent. To be financially independent, you must start investing right from your first pay cheque. The best thing about starting early is that unlike later stages of your life, you do not mostly have any family commitments or any other responsibilities. Mutual funds are a good investment option for investors who are starting fresh as they provide professional management of your investments. Let’s understand how you can plan your mutual fund investments. 

How to invest in mutual funds?

If you are wondering how to invest in mutual funds, just follow these simple steps:

  1. Evaluate the amount you wish to invest in mutual funds
    Primary step towards beginning your investment journey in mutual funds is evaluating the amount you would need to invest in mutual funds. You must not invest in mutual funds on an ad-hoc basis. Rather, you must carefully analyse your investments. Mutual fund return calculator can be used to help you evaluate this estimated amount.

  2. Importance of emergency fund
    Though it is important to evaluate different mutual fund investment plans, and begin your investment journey, you must not do it at the expense of emergency corpus. Emergency funds can be used during unforeseen contingencies such as house repair, loss of job, death, etc. This will also ensure that you do not dip into your investments during an emergency.

  3. Be patient with your investments
    Two of the most important virtues required for successful investing in mutual funds is patience and consistency. You must give your mutual fund investments the much-needed time to grow to their maximum potential and offer optimum returns. Remember, the longer you stay invested, higher would be the benefits of power of compounding, and higher would be the returns achieved.

  4. Implement the right investment strategy
    It is important to choose the right investment strategy and right asset allocation plan based on your financial portfolio. Your mutual fund investments must align with your financial portfolio. Basically, the objective and risk profile of your funds must be in line with your financial objectives, risk appetite, and investment horizon. Also, do not forget to diversify your portfolio.

  5. Review Review Review
    Once you have allocated your funds to all investment goals, including retirement, you must review your financial portfolio on a regular basis. Mutual fund comparison is a good way to understand if your fund is underperforming against other mutual funds in the same category. You can also compare your funds against the underlying benchmark. If your fund has consistently offered negative or poor returns for at least four to five years, you might consider switching to better performing funds. Hence, develop the habit of reviewing your financial portfolio at least once a year. 

So, begin your investment journey in mutual funds right from your first pay cheque. You can start small with SIP investments and gradually increase your investment amount as and when your salary or income increases. Happy investing!


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