how to start investing in mutual funds in 2025

The Indian mutual fund industry has grown a lot. Assets under management (AUM) went from Rs 10.96 trillion in October 2014 to Rs 67.26 trillion in October 2024. This is a huge increase in just 10 years¹. The “Mutual Fund Sahi Hai” campaign has helped many people understand how mutual funds can help grow their wealth. Now, it’s easier than ever to invest in mutual funds thanks to online platforms.

Whether you’re new to investing or have been doing it for a while, 2025 is a great time to explore mutual funds. There are many types of funds, like equity, debt, and hybrid. Plus, you can finish the KYC process online in less than 24 hours¹. This makes it simple to start building a diverse portfolio.

• The Indian mutual fund industry has experienced exponential growth, with AUM increasing over 6-fold in the last 10 years.
• Mutual fund investing has become more accessible, with the “Mutual Fund Sahi Hai” campaign and user-friendly online platforms.
• Investors can choose from a wide range of fund categories, including equity, debt, and hybrid options.
• The KYC process for mutual fund investments can now be completed online in under 24 hours.
• Diversification and portfolio rebalancing are essential strategies for long-term wealth creation.

The Indian mutual fund industry has grown a lot in recent years. It has become a big part of the country’s financial scene. By June 2024, it was worth a huge Rs. 61,33,227 crore². This shows more people and companies are interested in mutual funds.

In the last ten years, the money managed by mutual funds in India has grown six times. It went from Rs. 9.75 trillion in June 2014 to Rs. 61.16 trillion in June 2024². The growth is even more impressive when you look at the last five years. The money managed by mutual funds doubled, going from Rs. 22.26 lakh crore in 2019-20 to Rs. 54.1 lakh crore in 2023-24². Experts think the industry will manage over Rs. 100 lakh crore by 2030².

The mutual fund industry has grown a lot, even when the world faced tough times. It shows the industry can handle hard financial situations². But, it has also faced challenges like people not knowing much about finance, not being able to get into the market, and being afraid of risk².

The mutual fund industry has changed a lot thanks to technology. Now, investing in mutual funds is easier and more convenient. This has helped people from all over to join the market easily². This change has helped more people invest and has made finance more inclusive.

The mutual fund industry in India has seen some big changes. Equity mutual funds have grown a lot, increasing by 55% to Rs. 23.50 lakh crore in FY24³. This shows people are more interested in investing for the long term and believe in the market’s growth.

Another big thing is that more people are investing through SIPs. In June 2024, SIP contributions hit Rs. 21,262 crore, more than Rs. 21,000 crore³. This shows people are committed to investing regularly and believe in the benefits of mutual funds.

The industry’s assets under management have also grown a lot. They first hit Rs. 100 lakh crore in May 2014, then doubled to Rs. 200 lakh crores by August 2017, and then went over Rs. 300 lakh crores by November 2020³. This growth has also led to more people opening accounts, showing more retail investors are joining the mutual fund industry³.

The Securities and Exchange Board of India (SEBI) has been key in making the mutual fund industry transparent and safe for investors². This strong rule-making has helped build trust and made the industry more stable for the future.

The mutual fund scene in India is growing fast, thanks to technology and changing trends. It offers many investment options for both individuals and big investors. As it keeps growing and changing, it’s a great way for people to build wealth and deal with the ups and downs of the financial world.

Investing in mutual funds in India is now easier, thanks to digital changes in finance. Whether you’re new or have experience, opening a mutual fund account is simple. You can do it online or offline⁴.

To start your mutual fund journey, pick from many reliable places. You can use mutual fund websites, online brokerages, or bank portals. Just sign up with your personal info, do the eKYC, and link your savings account for transfers⁴.

If you like doing things the old way, visit a mutual fund office or a registered dealer. You’ll fill out forms, provide documents like PAN and Aadhaar, and invest with a cheque or draft. After that, you’ll get your account statement and a folio number⁴.

No matter how you choose, the steps are the same. First, figure out your investment goals. Then, pick the right types of mutual funds for you. Finally, complete the needed steps to start your investment journey⁴.

By learning about the best mutual funds for beginners and the ways to open an account, you’re on your way. You’ll build a diverse portfolio and reach your financial goals⁵.

“Investing in mutual funds is a smart way to diversify your portfolio and benefit from professional management, without the hassle of directly managing individual securities.”

Investing in mutual funds means you must go through the Know Your Customer (KYC) process. This step checks your identity and address, making it safer and more compliant. Let’s look at the main steps to complete the KYC for mutual fund investments.

The online KYC is easy for investors. Just go to a mutual fund or third-party site, enter your PAN and Aadhaar, and confirm with a One-Time Password (OTP)⁶. This method was started in 2012 to make verification easier across the mutual fund world⁶.

For offline KYC, download the form, fill it out, and bring it to a mutual fund office. You’ll need your PAN card, address proof, and a photo⁶.

The KYC status for mutual fund investors is divided into three: ‘validated’, ‘registered’, and ‘on hold’⁷. Those with an Aadhaar card are ‘validated’, letting them trade freely⁷. People with other IDs are ‘registered’, but can only invest in current funds until they update with an Aadhaar⁷.

Those with an ‘on hold’ status can’t invest but can still redeem after the fund houses check⁷. NRIs without an Aadhaar can invest by showing their passport and address proof⁷. Also, HUF investors can keep investing without issues⁷. These rules change for everyone except NRIs on May 31, 2024⁷.

Getting through the KYC is key for investing in mutual funds. Knowing the online and offline steps, and the common issues and fixes, helps investors smoothly go through the KYC. This way, they can easily explore the many options in the mutual fund market⁷⁶⁸.

Mutual funds come in many types to fit different risk levels and goals. Whether you want stability or growth, there’s a fund for you.

Equity mutual funds mainly invest in stocks. In 2023, over half of American households had investments in mutual funds, collectively owning 88% of all mutual fund assets.⁹ They can be split into large-cap, mid-cap, and small-cap funds¹⁰.

Debt mutual funds aim for steady income from bonds and other fixed-income securities. Bond funds focus on generating consistent returns through investments in government bonds, corporate bonds, and other debt instruments.¹⁰

Hybrid mutual funds blend equity and debt for a balance of growth and stability. They mix stocks and bonds for those who want moderate risk¹⁰.

Specialized funds, like sector-specific and ETFs, offer targeted investment options. Various types of Mutual Funds cater to different risk profiles, from very low-risk options like Money Market Funds to high-risk options like sector-specific Equity Funds.¹⁰

When picking mutual funds, think about your goals, risk level, and market trends. This helps create a diversified portfolio that matches your long-term financial dreams⁹¹¹¹⁰.

Investors looking for long-term growth should explore different mutual fund strategies. A common method is the core-satellite portfolio. This includes a core of low-cost index funds, with satellite funds in specific sectors or markets¹².

Diversifying your portfolio across different asset classes is also important. This includes stocks, bonds, and even gold or real estate. It helps reduce risk and can increase returns over time¹³.

The Systematic Investment Plan (SIP) is great for building wealth over time. It involves regular, small investments, which can be beneficial in unstable markets¹²¹³.

On the other hand, lump sum investments can be timed to take advantage of market discounts. Mixing SIP and lump sum strategies can be a smart long-term plan¹⁴.

Spreading your mutual fund investments across different sectors and styles is key. This includes large-cap, mid-cap, and small-cap funds, as well as value, growth, and blend strategies¹³.

Thematic or sectoral funds can also add value by focusing on emerging trends or industries. But, it’s important to keep a balanced portfolio and avoid too much focus on one area¹³.

Managing risk is crucial for long-term growth. Regularly reviewing and rebalancing your portfolio helps keep it aligned with your risk level and goals. This might mean adjusting your investments as the market and your situation change¹³.

Also, spreading your investments across multiple funds can protect against poor performance. It allows for more tailored investment plans¹².

“Investing in mutual funds through a systematic approach, diversifying across asset classes, and actively managing risk can be key strategies for long-term growth.”

Looking ahead to 2025, investors should check out the best mutual funds for beginners. These funds have shown strong growth, beating their benchmarks. They offer great chances to grow your wealth over time.

The Quant Small Cap Fund has a remarkable XIRR of 45.86% over five years¹⁵. The Motilal Oswal Mid Cap Fund and the Quant Flexi Cap Fund also did well, with XIRRs of 40.44% and 33.31%, respectively¹⁵. For those interested in big companies, the Nippon India Large Cap Fund is a good choice, with a 26.11% XIRR over five years¹⁵.

These funds have beaten their benchmarks, showing they could keep performing well in the future¹⁵. But remember, past success doesn’t mean future wins. Always think about your risk level and goals before investing¹⁶.

Systematic investment plans (SIPs) have helped these funds grow. SIPs let investors average out costs and handle market ups and downs¹⁵. With SIPs becoming easier to start online, the mutual fund industry in India is set for more growth and new ideas¹⁵.

Starting your mutual fund journey? It’s key to find the best funds for beginners and the top performers. This way, you can aim for high returns and create a diverse portfolio that meets your financial goals¹⁶.

Investing in mutual funds can help you grow your wealth over time. The Indian mutual fund industry has grown a lot, with more people investing¹⁷. It’s important to know the different types of mutual funds and complete the KYC requirements to invest wisely¹⁸¹⁹.

Using strategies like Systematic Investment Plans (SIPs) and diversifying your portfolio can help meet your financial goals¹⁸. Regularly checking and adjusting your investments keeps them in line with your goals¹⁸.

The mutual fund industry keeps changing, so staying updated and seeking advice when needed is key¹⁷. Mutual funds offer benefits like diversification and professional management, helping you build a strong investment portfolio for the future.