How to Make Smarter Mutual Fund Investments: A Complete Guide

Investing in mutual funds requires a long-term perspective to maximize growth and financial security. This guide covers key factors to consider before investing.

Long-Term Performance vs. Short-Term Returns ?

A solid five-year performance is a better indicator of stability than short-term returns. For instance, Kotak Flexi Cap Fund shows a 13% return over three years but only 7% over five years. In contrast, Quant Flexi Cap Fund offers a more consistent 19% return over five years.

Expense Ratio and Fund Management?

The expense ratio represents the cost of fund management. Lower expense ratios are preferable, such as Quant Flexi Cap Fund with just 0.58%. Always check the track record of fund managers and Assets Under Management (AUM) before investing.

SIP vs. Lump Sum Investment?

SIPs help average out market volatility, while lump-sum investments are better during market lows. An SIP of ₹500 monthly could grow to ₹71 lakh over time, while investing ₹5,000 per month at 18% returns could yield ₹7 crores in 30 years.

The Power of Compounding?

An investment of ₹5 lakh with an annual return of 15% could grow to ₹3.31 crores in 30 years. If the return is 18%, the value could reach ₹7 crores, demonstrating the power of compounding.

Why Choose Upstox?

Upstox provides a free DEMAT account with no maintenance fees, tools to track investments, and a SIP calculator to analyze long-term growth.

Conclusion

Choosing mutual funds based on long-term returns, expense ratios, and fund management expertise is crucial. Use SIPs or lump-sum investments strategically and leverage compounding for wealth growth.

Why Learn Stock Market Investing?

Many beginners enter the stock market with the hope of making quick money, often influenced by social media success stories. However, without proper knowledge, the chances of making losses are much higher than making profits. Learning stock market investing is crucial to:

• Avoid unnecessary losses
• Make informed investment decisions
• Develop a systematic approach to trading and investing

What Will You Learn in This Crash Course?

This course is structured to take you from a beginner to an advanced level.

1. Introduction to Investing

• What is stock market investing?
• Different investment options (stocks, mutual funds, EPF, etc.)
• Fundamental analysis basics
• Ratio analysis and valuation techniques

2. Understanding Technical Analysis

• Support and resistance levels
• Indicator-based trading
• Price action trading
• Momentum trading
• Breakout and breakdown strategies
• Identifying fake breakouts
• Volume analysis

3. Trading Strategies

• Intraday trading basics and strategies
• Swing trading techniques
• Future trading insights
• Options trading fundamentals
• Option chain analysis and strategies
• Understanding option Greeks

4. Financial Education & Wealth Management

• The three pillars of financial education: earning, managing, and investing money
• The importance of financial awareness
• How to protect and grow your wealth
• The impact of inflation on money

The Importance of Financial Education

Financial literacy isn’t just about stock market investing; it includes understanding how to earn, manage, and grow money. Without these three pillars, financial success is difficult to achieve. This course emphasizes the need for financial education in India and aims to make it accessible to everyone.

Rule of 72: Understanding Investment Growth

One of the key concepts you will learn in this course is the Rule of 72, which helps estimate how long it takes for an investment to double.

Years to Double = 72 / Annual Return Rate

For example, if you get a 12% return on your investment:

Your money will double in 6 years.

Questions 1. What is Technical Analysis in the Stock Market? 2. How Can Beginners Learn Stock Market Techniques? 3. What Are the Best Resources for Technical Analysis? 4. Why is Technical Analysis Important for Traders? 5. How Do I Apply Technical Analysis to My Trading? Our goal is to achieve at least 24% annual returns, ensuring that money doubles within 3 to 4 years.

Practical Steps to Get Started

• Commit to Learning – Watch the daily videos at 9:30 AM and take notes.
• Follow the Course Step-by-Step – Each lesson builds upon the previous one.
• Apply Your Knowledge – Start with small investments and analyze your progress.
• Stay Consistent – Learning the stock market takes time, so patience is key.e returns of large caps. We are not sure if this will happen every time, but it happens mostly. And then come the small caps. You will say, Brother, that small caps can be compared to horses. All the money should be invested in it. But here, there are some donkeys along with the horses, so your risk rate increases here. See, large caps are the least risky, mid caps have more risk than large caps, and small caps have more risk than both of them. The higher the risk, the higher the potential for returns. But this happens over years. Now let me just explain this to you, but I will also tell you this with clarity. By the way, you do not need to invest money in large-cap companies. Unless the expense ratio is very low, now I will tell you about it. When the concept is clear to you, which may take some time, it should be crystal clear, such that when you talk to anyone else, the person in front of you will think that they are talking to an expert because even people who invest in mutual funds do not know the knowledge you are getting. You will know everything. Your knowledge will increase, and you will definitely be able to save some money. If you understand the compounding game, then compounding some money over time will result in a crore difference.I am going to show you that too. Here I told you that, basically, you do not have to invest in large caps. We have a better option than that. Now I will tell you what that is. So here is a little lengthy video, but you need to understand. Now, what is "multi-cap"? It means that the company will also invest in large caps, midcaps, and small caps. But there are also guidelines. The company will have to say how much money is invested in large caps, midcaps, and small caps. What is a Flexi Cap company? Flexi-cap companies don’t have to say this. They will feel that if a small-cap company does very well, they should invest money in it. Then later they can put it in a large cap, so they can shuffle very easily here. So this basic understanding is necessary. Now comes the important part.What is a debt fund? A debt fund is safer than an equity fund. In the stock market, your money is invested because anything can happen there. If there is a crash, you may feel that you are not getting good returns. It gets very good returns if it booms.What happens in a debt fund is that you get comparative safety. But should you invest in debt funds? The answer will be "time horizon." I will talk about it. What are hybrid funds? They include many types of funds. Many people consider it equity plus debt. Apart from this, there are also some hybrid funds, which I have yet to tell you about. I hope we are all clear. Now we can go ahead with this, so now the concept is clear: first of all, what is a mutual fund? A mutual fund is a fund that is run by an asset management company. The fund manager of this fund runs it. People put money in the fund, and in return, we get units, i.e., NEVs. Now, if we want to put our money in the stock market, we can do so. If we want to diversify our money, we can do equity mutual funds, inside of which we have multiple segments where we can put money into large-cap Medicare works with small-cap, large-cap, mid-cap, multi-cap, and flex-cap companies. Then we have an option. If you want to go safe, where the returns will be low and the risk will also be low, you can go with debt mutual funds. There is also the option of a hybrid, which we have to understand in detail now that we are moving forward. There is something important that most people don't share with you. But my sharing is important as you are in this crash course; I want you to learn everything, right? Now a lot of people talk about expense ratios. We have also talked about how it can be anything from zero to two per cent. But there is one more thing that AMCs make money from, and if you do not know, then you can be at a loss, and that is exit load. A lot of people ask me: "We have invested in mutual funds, and our money has increased, but now we want our money back." "Can I get my money back?" Yes, you will get your money easily. Money will come in two days. But if you want to withdraw money before the lock-in period, then what exit load is applicable? If you exit, you will bear a load. Load refers to the commission once more.This load can be one per cent, which is average. It can also be up to 4 per cent. Yes, it can be zero too. There is an exit load ranging from zero to four per cent. If you make a mutual fund investment and withdraw the money before the lock-in period, for example, you may say that you have accumulated Rs. 25,000. You want that Rs. 25,000 within six months, so if your one per cent exit is applied, then your Rs. 250 will be deducted. You will receive the remainder of the funds.You need to understand. Now, how do you know how the exit load is applied and what the expense ratio is? For this, we will use screeners, which will also make your work easier. I'll just show you how it works. For example, I'll use tickertape you can also use this for stock screening, and I am using it right now for mutual fund screening. I'll show you here the concepts that I have taught you today, step by step. When you click on the screener here, you will see a mutual fund screener. How will you be seen there? I have already opened it here. Now, if you look at the categories, we discussed these three concepts: equity, debt, and hybrid.Now if you want to know what a commodity is, it means that you can also invest in gold using mutual funds. You see that most of the investment here is being made in gold, so if you want, you can also purchase digital gold; that is your choice, and in other cases, it includes children, marriage, etc. We can do the planning for this ourselves. So that is not needed. Let's talk about actually important things. Now how would you know? For example, if you are interested in equity funds, there are a lot of things like contra funds about which we will have to talk. For example, you say that you want to invest in both large-cap and mid-cap companies, and you see that here we have both of them. Ok, so now you see. There are many here. Some are of Cannera, Kotak, or SBI. Now here you can also see what AUM is—it actually means asset under management. means. It means how much money is being handled by them as of now. Ok, how much money is invested in this fund? What is a compound annual growth rate now that you've seen CAGR? It informs us of the percentage returns it has provided.So, for the past three years, you've seen 21% of the Kotak one here.You have an expense ratio of 0.59, so I would say less than one per cent. We'll have a discussion about it now; even those above 1% are acceptable.If it is less than 1%, it is generally acceptable.Now, 0.59 is reasonable; after this, you will notice something significant.I will filter it for you, and we want exit loading. This is the exit load that I was talking about. Here comes the exit load. If you are entering any par, you must now see the exit load.Definitely, Horizon; we will talk now. But here you see, for example, that you have invested money in the Kotak Equity Fund. Its exit load is one per cent. Now You see SBI large and midcap funds, in which the exit load is 0.10. So you've discovered a lower exit load.The expense ratio is high. So the company must earn it somewhere, either here or there.It is also necessary to see If your Horizon is long-term, you don't need to consider exit load.Exit load will not bother you much because your investment will be higher than the lock-in period you have, which is ok. This was a basic thing that I had to show to show that exit load is also applicable. If you don't trust me, I will show you. For example, I'll select equity, and now you can see the exit load; now you will see companies that offer a 2% exit load; if I go further, we can also see an exit load of 4%. Expense Ratio of 1.28 You will see that the companies are earning, and you can also see here the returns they are producing. Seeing this is important, for which I suggest you use a screener. Now we have something to discuss. You should not get confused because there are a lot of things to understand. I have told you all the important things, and I also have to tell you now about index funds. We also had to show a little bit of hybrid to understand what this hybrid is all about. What is a hybrid? So inside the hybrid, as you can see here, you get arbitrage funds. Arbitrage is Basically, what happens is that we take advantage of the price difference. How do we do this? For example, if you see Reliance Share, it is on NSE and also on BSE. You will see that sometimes there is a difference of 50 paise between NSE and BSE. But if there are transactions worth thousands of crores, these 50 paise will amount to thousands of crores; this is the meaning of arbitrage. Multi-asset allocation means that we are not putting our money in one place but rather in multiple assets. Capital production is pointless here, and I'm not going into detail because you don't have to invest money in hybrid.This is the thing. Now what do we have to do, and how do we have to do it? Let's talk about it. The first thing you do whenever you invest is to think to yourself. You have to ask yourself, "For how long do you want to invest?" If your time horizon is not clear, then it will be a problem because you must know how much time you are planning to invest, and you can decide this based on your goal. Your goal can be anything: your own wedding, the purchase of your own car, your children's wedding, maybe saving for the family, or saving for your children's education. Thus, it is important to decide your goal. For example, if you are saving up for your children's marriage, you have a long horizon, say 20 or 25 years. So this is a big goal. You may say that I am doing this for my retirement now, or you may think that I am retiring in 30 years. so your goal will be 30 years. As a result, determining time is critical in relation to the goal.Now you may say that within 5 years, you want at least one crore rupees. Ok, so what is your time? It will be 5 years. It depends on what you will do with one crore rupees, so you can say that I have to apply for the house. You need to know your time duration because many things change with time. My brother, this is the biggest thing for compounding. After this comes to the return, and you people talk about the returns. How much return will I get? I ask, "How much time will you invest?" The time in which you are investing It’s going to make a big difference. And finally, we have to see the risk. Now let me tell you the thing: as long as you go for the long term, I would like to tell you one thing here. You don’t know anything. You have zero knowledge. I say you close your eyes and invest your money in any mutual fund. If your time horizon is long, then every mutual fund will earn you money. Money is made in every mutual fund. There is no such thing as a mutual fund where money is not made. Now we are talking about equity. If you will also discuss debt mutual funds.In debt, you can also make money on short terms. Now I am not focusing much on that because you will achieve your goals from what I am explaining alone. You should consider debt if your time horizon is two years or less. If your time horizon is longer than 2 years, you should go with only equity; if it is less than that, you also have other options. So you should only consider debt mutual funds for less than 2 years; otherwise, you should only consider equity. Now if you focus on equity and your time horizon is longer than 2 years, we will have to understand this. What time do you want to set aside for more than two years?Anything older than 2 years can now be 10, 20, or 30. After that, returns and risks follow. Our entire mutual fund depends on these three things. If I have more time, I can take more risks. And when it is less, I can take less risk. If you've understood this, we are going to move forward. Now I have more time, so what is the meaning of more? "More" means more than 5 years. More than 5 years is more. It is less than 5 years.If you have more than 5 years, you can take more risks, my friend. If you can take more risk, where can you invest? You are still watching.If your time horizon is longer, then you should not invest in large caps. If your time frame is 3–5 years, choose midcaps. If it is more than 5 years, then these three options are for you. For more than 5 years, I will recommend that you go for Flexi Cap funds. If you have a time horizon of more than 5 years, Flexi-cap funds are great for you. Plus, if you want to increase your safety, then I will also recommend index funds to you. What are index funds now? Understand quickly. Look, we have to understand two things. One is an "active fund," which is managed actively. For this reason, your fees, which are your expense ratio, are a bit higher. The second is a passive fund, which does not need to be managed very actively. This doesn't mean that your money will be wasted, but why do they need to be managed actively? For example, you are investing according to the Nifty 50 or according to the Nifty Next 50. In the "nifty fifty," all the money will be invested in those 50 companies only. And this will be reflected in the proportion in which these companies exist within the Nifty 50. Basically, index funds (passive funds) are becoming very popular because the fees are lower. And the money is being spent by India’s top 50 companies. So Warren Buffet once bet a fund house that no matter what he did, he couldn't beat the S&P 500.Just like India has the Nifty 50, the US has the S&P 500. No matter what you do, you cannot beat The returns of the S&P 500 The result of this bet was that Warren Buffet was actually right. The returns of the index had beaten those of the actively managed funds, so the index gets you great returns. If you want, you can start investing in debt first, and if you have a longer time horizon, you can grow further in the index. Here, there were only the top 50 companies, but there can be a company that falls within this list of the top 50. It is not there today; it may be there in 5 years. The fund manager can use his mind and choose wisely. When your horizon is large, the Flexi cap can produce big returns. So now you understand this thing. Now, I told you not to invest in large caps. Because, brother, if I want to invest in large caps, I will instead invest in index funds, right? If I have to do it in large cap, then index investing is also there, and you can do it in the Nifty 50, and there is nothing better than that. Put money in the Nifty 50. You are investing in the top 50 countries in India. There is also diversification, and the expense ratio is also low. In the name of large caps, I would have to give a higher expense ratio. Now you can use your mind and intelligence to decide which mutual fund to invest in. As I said, which flexicap company is good? Again, choose a screener. You can get a lot of things in screeners. I will remove all of this fro