Mutual Funds Made Simple – A Beginner’s Guide by Varun Hiremath

What Is a Mutual Fund?

Mutual fund investment is similar to joint investment where you and all the other investors together jointly invest rather than in individual stocks, bonds or other investments. The sum that will be generated will then be invested in acquiring diversified financial instruments.

Investments are grouped into units or shares in the fund which is what you own a share of in the time of investment. Thanks to it you can easily invest in diversified portfolio without stretching your budget or having to be an expert in financial markets.

How Mutual Funds Work

The functioning of the Mutual funds are done by professionals, who is responsible in deciding where and how to invest the collective amount:

• Growth: Focusing on long-term capital appreciation.
• Income: Generating regular returns through interest or dividends.
• Stability: Preserving capital with minimal risk.

The fund manager allocates that money to invest in various other securities like stocks, bonds or government bonds.

When the investments gain value, the investors begin to generate returns in three ways:

1. Capital gains when the fund sells assets at a profit.
2. Dividends or interest payments generated by the investments.
3. Increase in Net Asset Value (NAV), which reflects the overall performance of the fund.

The unit you possess might increase or decrease in value according to the performance of the fund.

Key Benefits of Mutual Funds

Key benefits of Mutual funds include:

1. Diversification: The money invested spreads across many different investments, without any fear of risk. If one investment do not perform well, then others can manage the same.
2. Professional Management: The professional managers always track the market, select investments, and manages them on your behalf.
3. Easy Access and Liquidity: You can begin with a small value and sell or purchase units at the existing NAV, which is flexible and can easily access your funds.
4. Transparency: Mutual funds are all about keeping you in the loop. They will keep you posted on all of their holdings, fees, and performance, and you will always know where your money is going. This openness will make you more comfortable and assured that you know exactly how your investment is being handled. It is everything to do with trusting and ensuring that you feel confident with your decisions.

Types of Mutual Funds

The types of mutual funds to suit different goals and risk are listed as:

• Equity Funds: Such funds mostly invest in stocks with the likelihood of a higher payoff. However, they are slightly more dangerous, thus, those are the most suitable in the event that you are all right with that with the chances of greater gains.
• Debt Funds: Investments in bonds and other fixed-income securities are also more secure, and less likely to be risky. It perhaps is the best option when you want something less risky and more trustworthy.
• Money Market Funds: These are meant to be low-risk short-term low returns investments. They are perfect when you do not want to risk your money and get some interest.
• Hybrid Funds: They present a combination of equity and debt say that you can grow and be safe. Feel like having one foot in each world? Hybrid funds may be the solution to your question.
• Index Funds: In fact, index funds are passive funds that are designed to follow a certain index in the market like the S&P 500. They want to be equal to the market, but not superior to it, which is also a good option when you are a hands-off type.
• Actively Managed Funds: These are actively managed funds which are designed to beat the market. They have a higher probability of higher returns, but have a little more management risk.

The Real Purpose of Mutual Funds

Through mutual funds, investors are encouraged to invest in financial markets without any knowledge or huge amount of money.

They provide:

• Diversification, so that your risk is diversified.
• Professional advice, so you do not have to make all the decisions by yourself.
• Easy entry and easy exit.
• Opportunities to grow, to enable you to realize your financial objectives.

Mutual funds simplify the creation of wealth that is practical and accessible. Whether it is for a big purchase, such as that dream house, or a future college education, or a future retirement, mutual funds can be an easy way to invest. They enable you to build your money slowly, but surely, all at a manageable pace. It is a clever, adaptive method to reach your financial objectives, regardless of the lifestage you are at.

Why Do People Choose Mutual Funds?

Here’s why people find Mutual funds effective to invest in:

1. Simplicity: When you put in your funds, the professionals do the rest of the work, you do not need to monitor every market day movements, or make decisions on the type of stock to purchase.
2. Safety in Diversification: In mutual funds your funds are diversified into a range of investments, thus risk is minimized. When one stock fails to meet expectations, then the other can offset it. This diversification provides you a cushion, and you can rest knowing that you are not putting all your eggs in one basket. It is an intelligent approach to risk management and yet the goal of growth.
3. Access to Expertise: You do not need any expertise, its the managers who make informed decisions on your behalf.
4. Start Small: You don’t have to start with a large amount . With the help of Systematic Investment Plans (SIPs), you can start by investing with small amount such as ₹500 per month.

"You don’t need lakhs to invest. You need consistency and the right advice." — Varun Hiremath

In short, mutual funds make investing simple, safe, and smart.

What Is an SIP?

SIPs stands for Systematic Investment Plan, they are like a fuel subscription that keeps the ride going and they function like a monthly EMI, except you’re paying yourself instead of a bank.

Here’s how it works:

1. Choose a mutual fund that fits your goals.
2. Decide how much you want to invest each month.
3. Set up an auto-debit from your bank account.
4. Watch your money grow steadily over time thanks to compounding — where your returns start generating their own returns.

This strategy is perfect for salaried individuals and small business owners who wish to build wealth , without going for a large one-time investment.

Types of Mutual Funds – Simplified

When it comes to choosing the right mutual fund, think of it as ordering a thali at a restaurant , where you select as per your taste, appetite, and spice level.

Here’s the simple breakdown:

1. Equity Funds: High return potential, but also high risk. Best for long-term goals like retirement or buying a home.
2. Debt Funds: Low risk, low return. Ideal for stability and short-term needs, like emergency funds.
3. Hybrid Funds: A balanced mix of equity and debt. Perfect for investors who want moderate growth with moderate risk.

"Mutual funds are like thalis — you pick what suits your taste, risk, and appetite."

Getting Started with Fair Deal Wealth Advisors

In the case of first-time investment, you have to go to Fair Deal Wealth Advisors, which is headed by Varun Hiremath. They provide easy and hassle free process.

Here’s how they help you start strong:

• Personalized guidance: Explaining fund choices in plain, easy-to-understand language.
• Hassle-free setup: Helping you open your SIP account without hidden charges or confusing paperwork.
• Ongoing support: Monitoring your portfolio and guiding you as your life goals and financial situation evolve.

Whether you are living in a big city such as Mumbai or a small Assamese town, with Fair Deal team, you will receive the same quality care and attention.

Want to Begin? Here’s What to Do

To begin your investment journey with mutual funds, follow these three steps:

1. Speak to a registered advisor — like the team at Fair Deal Wealth Advisors.
2. Understand your financial goals — retirement, children’s education, buying a home, etc.
3. Start your SIP and stay consistent. The key to building wealth is discipline, not luck.

Varun Hiremath is Founder/CEO of Fair Deal Wealth Advisors, a mutual fund and Portfolio Management Services (PMS) distribution company based in Mumbai, India.

Background and Mutual Fund Expertise

Hiremath Varun is an equity researcher and finance analyst with a vast experience of working with companies like Girik Capital and Times Network. In 2023, he started Fair Deal Wealth Advisors, and a clear focus of their business is to provide personalized wealth management advice.

The team at Fair Deal Wealth Advisors focuses on assisting individuals and families to make well-informed investment choices, and one of the main elements of long-term financial planning is mutual funds. They have a personalized approach to every client, and they will ensure they possess the right strategy to help them achieve their financial objectives.

Besides the one-on-one advisory services, Fair Deal Wealth Advisors has seminars and educational programs targeting beginners. These lessons also offer insight to mutual funds as a good investment choice and why long-term growth and financial literacy are crucial.

Approach to Mutual Funds

Varun Hiremath advices investors to start investing early with mutual funds and remain consistent to enjoy long-term wealth creation, benefits of diversification, professional management, and simplicity in the entire investment journey.

With the help of the Fair Deal Wealth Advisors, clients can easily select the right mutual funds that suits their financial goals and risk tolerance, which makes mutual funds accessible for the retail investors.

Varun Hiremath’s commitment to conducting financial education and making mutual fund investing simpler, strategic, and approachable for beginners, makes stands out in the market.