Financial independence is what everyone should strive toward. It empowers you to spend time wisely, focus on things that matter to you, and even be confident enough to make decisions without worrying a lot.
One of the best ways to achieve financial independence is through habitual investments. A mutual fund app can help you take a disciplined approach to investing. It allows you to set up SIPs, view your investments in a strategic dashboard, observe returns, and much more.
But it is recommended first to understand how to use mutual fund apps, how they work and much more:
In simple terms, a mutual fund is a pool of funds from investors. The amount collected is invested in multiple instruments to create a diverse portfolio of security.
The fund is managed by investment professionals in various fund houses. Each fund has a different theme, risk profile, and goal.
A mutual fund app is one of the ways in which you can invest in mutual funds. In a mutual fund app, there are two types of investment opportunities. Some funds are direct, while some are regular. A direct fund is where the invested amount directly goes to the fund house, and the expense ratio is lower. When you invest in a regular mutual fund or through a mutual fund distributor, the investment amount does go to the fund house. However, the expense ratio is higher. The higher expense ratio is to accommodate the commissions of a distributor or a broker.
Types of mutual funds:
A mutual fund app will contain multiple funds from various fund houses. Each of them is of a different type, which determines the risk profile, potential rewards, the type of investment a particular fund will make, and more.
| Type | Description |
| Equity Funds | Equity funds invested in stock markets are further divided into large cap, mid cap, small cap, and many types to focus on a specific size of companies. |
| Debt Funds | A debt fund invests in fixed-income solutions like bonds for stable returns. The intention is to avoid capital erosion. |
| Hybrid Funds | Combine both equity and debt instruments to balance risk and return. |
| Index Funds | Invest in specific indexes and manage them for a better experience. |
| Sector Funds | Follow a specific theme like technology, green investments, real estate, and others. |
How do SIPs in a mutual fund app help with financial independence?
Disciplined investing can help compound returns when you have a long-term investment horizon. Warren Buffett is one such example of how long-term investments can provide significant returns.
A mutual fund SIP is such an option that helps you gain financial independence. In our routine lives, many of us do not get a chance to research, invest, and make wise investment decisions. A SIP through a mutual fund app helps us with the following:
- Simplified Investing
- Consistent investing
- Brings discipline into the picture
- Helps build wealth over time
You can start investing with as little as ₹500. A mutual fund can provide an average of 20% returns on the amount invested. Obviously, many funds do provide greater returns, but it all depends on your fund, fund manager, risk profile, and tenure.
