Ways to Invest in Mutual Funds

Buying and selling mutual fund units is done at the net asset value (NAV) of the scheme, which is simply the price of a single unit of that mutual fund scheme. It is like price of one share of a stock. It is calculated by dividing the total value of all the cash and securities in a fund’s portfolio, minus any liabilities, by the number of outstanding units.

Ways to invest in Mutual funds:

• Lump Sum Investing your entire amount in one go, at the prevailing NAV - suited to money you already have available, such as a bonus or maturity payout, rather than a fixed monthly commitment.
• SIP (Systematic Investment Plan) Investing a fixed amount at regular intervals (usually monthly), which builds discipline and benefits from rupee cost averaging - buying more units when prices are low and fewer when prices are high.
• STP (Systematic Transfer Plan) Automatically transferring a fixed amount at regular intervals from one scheme to another within the same fund house - commonly used to move a lump sum gradually from a debt fund into an equity fund, rather than investing it all at once.
• Switch A one-time transfer of your investment from one scheme to another within the same fund house, for example moving from an equity fund to a debt fund as you get closer to your goal.