New to investing? Learn mutual fund basics in simple terms — what mutual funds are, how they work in India, types of funds, key terms like NAV and expense ratio, and how to start with as little as ₹500/month via SIP.
A mutual fund is a investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Professional fund managers make investment decisions on behalf of all investors.
Imagine 1000 people each contributing ₹1000 to buy different stocks. Instead of each person buying 1-2 stocks, the pooled ₹10 lakhs can buy 50+ different stocks. A professional manager decides which stocks to buy/sell. Everyone owns a portion of this diversified portfolio.
Risk spread across multiple securities
Expert fund managers handle investments
SEBI regulated for investor protection
Understanding different fund categories to match your investment goals
Invest primarily in stocks of companies
Invest in bonds and government securities
Mix of equity and debt investments
Target specific goals like retirement
You buy units of mutual fund scheme with your money
Your money is combined with thousands of other investors
Fund manager invests in diversified portfolio of securities
Profits/losses are shared among all investors proportionally
Essential terminology every mutual fund investor should know
Price per unit of mutual fund, calculated daily based on portfolio value
Annual fee charged by fund house, expressed as percentage of fund value
Total value of investments managed by the mutual fund scheme
Fee charged when you redeem units before a specified period
Professional who makes investment decisions for the mutual fund
Index against which fund performance is compared (e.g., Nifty 50, Sensex)
Follow these simple steps to begin your mutual fund journey
Understand your goals, risk appetite, and investment horizon
One-time process to verify your identity and address
Choose funds, start SIP, and begin your wealth creation journey
A mutual fund pools money from many investors to buy a diversified portfolio of stocks, bonds, or other securities. A professional fund manager invests on your behalf — you own units proportional to your contribution.
You invest and receive units at the day's NAV. The fund manager buys securities with pooled money. When investments gain value, NAV rises — you profit when you redeem at a higher NAV than your purchase price.
SIP from ₹500/month, lumpsum from ₹1,000–5,000 depending on the fund. Use our SIP Calculator to plan returns for your amount.
SEBI-regulated but not risk-free. Equity funds fluctuate with markets. Debt funds are lower risk. Diversification and long-term investing (5+ years for equity) reduce risk but don't eliminate it.
Net Asset Value is the per-unit price, updated daily. Total portfolio value ÷ total units outstanding. You buy and sell units at the prevailing NAV.
Large-cap equity or index funds for long-term goals. Hybrid funds for balanced risk. Start with SIP rather than lumpsum. Read our SIP Investment Guide for step-by-step help.