Depending on its investment objective, management costs, and other criteria, each mutual fund has a different minimum investment requirement, which can range from Rs 100 to lakhs of rupees. Bear these tips in mind before delving into the world of mutual funds. The Securities and Exchange Board of India (SEBI) set the minimum investment amount in mutual funds in India at Rs. 100 for lump-sum deposits and Rs. 500 for SIPs.
Mutual funds with greater minimum investment requirements are typically targeted towards high-net-worth individuals or institutional investors. Those with smaller minimum investment criteria, on the other hand, are created to be more open to regular investors. Before making an investment, you as an investor need to understand this requirement because it affects both the cost of the initial investment and the prospective profits.
You should think about the costs involved with a mutual fund investment in addition to the minimum investment amount. Mutual funds impose fees, such as management costs, operating costs, and other costs, which can lower overall investment returns. Before making an investment, it is critical that you understand the cost structure.
In addition, you can select a variety of mutual funds based on your investment objectives and risk tolerance. For instance, while debt funds engage mostly in fixed-income instruments and are regarded as low-risk investments, equity funds invest primarily in equities, which are considered high-risk assets. Hybrid funds, as their name implies, invest in a combination of equity and debt instruments and provide a well-rounded method of investing.
Daily and weekly SIPs with lower investment criteria are offered by several mutual funds. In order to reach out to the rural market, the mutual fund industry has also launched micro-SIPs, which have a minimum SIP amount of Rs. 100. This enables investors in remote locations to participate in regulated businesses and grow their money.
A smaller minimum commitment amount may seem alluring, but before making a mutual fund investment, it's important to think about your overall investment strategy.
