Mutual Funds For Women: A Great Investment Option

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According to a survey conducted by Groww, 79% of women chose mutual funds as a good investment option.

Financial awareness is on the rise and women are starting to take more risks. After all, women can do anything and invest for their futures just makes sense. This includes having a top-notch financial plan that involves maximum rewards with minimum effort.

Women have a hundred things going on in their lives, all at the same time. They don’t necessarily have hours to pore over the financial data of companies to analyse fundamentals. They want a ready-made option — something that offers the best of both worlds.

That is why mutual funds fit all the requirements of millennial women (and frankly everyone else on earth.) 

What Are Mutual Funds

Mutual funds are essentially large sums of money that are invested in accumulated form. A bunch of investors pool their money together. Then they assign an experienced professional — a money manager — to invest that pool of money in the best assets and generate maximum returns.

However, stock investments take a lot of effort and dedication, and it is not to be taken lightly.

How Do Mutual Funds Work

Consider a group of 10 people. Each of those 10 people contributes ₹1 lakh to the investment fund. A dedicated manager is assigned to take care of the money. The total amount of ₹10 lakhs is then invested as a whole in a selection of stocks. 

This is exactly how a mutual fund functions. Thousands of investors pool their money together with an AMC (Asset Management Company). These are the fund houses that are just some of the most popular ones right now— HDFC AMC, ICICI AMC, and SBI AMC.

Experienced money managers, who work at these companies are put in charge of the total pool of money. They invest them in a selection of shares and bonds.

There can be hundreds of different mutual fund portfolios depending on the type of asset and the investment objective. For example, there can be a fund that invests only in top-performing companies. These funds would be safer compared to other equity investments. 

There may be funds that invest only in companies of a particular sector. There may be funds that invest only in government bonds.

How To Select The Right Mutual Fund

Selecting the right mutual fund is a three-step process.

Step 1:

Decide on the investment approach. 

Think about why you want to invest. Are you saving for something in particular? Or are you simply trying to grow your wealth over time?

Your investment strategy will depend on your financial goals. Once you’ve selected your goal, it’s a simple matter of finding a complementary investment strategy.

Step 2:

Decide on the investment period.

Whether you want to invest for the short term or the long term, it will impact the choice of your mutual fund. Some funds that are riskier are unsuitable in the short term. The risk balances out over time.

If you want to invest for a couple of months, it is best to go for a debt fund, not an equity one. For equity, you should have a time window of at least a couple of years.

Step 3:

Decide on the investment amount.

This is the final step that will help you narrow down your mutual fund investment. The amount you want to invest will decide the type of investment — SIP or lump sum. 

We hope you find this article helpful. You can share your thoughts or questions with us by commenting below

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