Mutual funds are very popular investment vehicles around the globe. Mutual funds are professionally managed investment fund and collected from hundreds of different background investor to purchase the securities like Share, Bond, Money market securities. Funds are managed by professional asset manager/fund manager. Each investor holds units which represent the portion of the holding of funds. And the profit generate this collective fund can distribute proportionately after deduction of applicable expenses. Simple term, the money pooled in by a large number of investor what makes up mutual fund. The common objective of all the investor who put money on that fund have common, that is grow wealth.

1 Find your investment goal and risk

 Before investing in mutual fund, you need to clear that why you are investing in mutual fund. You should not put your money without thinking your short term and long term goal. You should think risk factor also while you invest.

• Mutual funds are generally best for long term investor. For short term you can invest into money market instruments.
• Every investment is come with risk factor. You should tolerance certain risk to achieve your goal.
• These funds are generally less risky than Stocks. Generally, funds are allocated to different kind of stocks and if particular stock cannot perform well than rest will cover. Allocating the fund to different stock minimize the risk

2 Compare between active mutual fund and passive mutual fund

You should decide which fund you want to invest in. there are so many ways to categories funds weather fund is managed by actively or passively.

Active fund: these funds are managed by professional after analyzing, research and selection. These fund cost is slightly higher. This funds shareholder can get higher return than market.

Passive Fund: These funds shareholder can get equal or slightly lower than market return. The fud cost is affordable. These investments are more consistent in long run.

3 Decide fund types and style

After decide between active fund and passive fund, you have more choice to make. There are mutual fund designed just about every investment performance, industry and market size.

• Index fund- these fund follow specific stock market indices
• Sector fund- these fund follow stocks in different industries, some follow financial sector, some manufacturing, some energy etc.
• Market capitalization fund- These fund follow Small cap, Mid cap, Large cap.
• Money market fund- These fund invest in short term fixed income securities like government bonds, treasury bills, commercial paper etc.
• Balance funds- These funds are investing in both money market and equity funds.

4 Allocate your mutual fund budget

      You need money to invest. You can use small amount of money initially which you will not use for short term. When you decide how much money to allocate to mutual fund, these two are key points.

• What is the minimum investment size of funds?
• What is the fee of funds?

5 To find right broker company

     You can find the best broker to invest in mutual fund who have low transaction cost with good client support.

6 Understand the mutual fund fee

     These fund generally come with management fee that can be different by the types and how it manages. Active funds charge more than passive funds.

7 Build and manage your portfolio

      Now you can buy shares and manage your portfolio. These fund bring you diversify in your portfolio with single purchase. You can build a portfolio with different mutual funds to give you more diversify in your investment.

Anyone can investment in mutual fund. It does not take years of experience and does not take university degree. By knowing how to invest in mutual fund, you can put your money for long term investment success.