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Mutual Fund Minimum Investment – Minimum Ideal Amount to Invest in 2022

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Investing in mutual funds

Many people are not able to start investing in mutual funds because they don’t have the ideal amount recommended by their financial advisor to invest towards their financial goals. However, you need not wait till you identify the ideal amount for investing. You can always start investing with the minimum amount. This article will focus on mutual fund minimum investment – Minimum ideal amount to invest in 2022.

Mutual fund minimum investment

In the past decade, using technology, mutual funds have increased their reach to small towns and rural areas, apart from the metros. However, people in small towns and rural areas can't invest bigger amounts. Hence, mutual fund houses have brought down the minimum investment amount for a lump sum and SIP investments to make investing affordable to everyone.

The minimum investment for lump sum and SIP

Every fund house can decide its own minimum investment amount for different schemes. Usually, most fund houses allow investors to start investing with a minimum of Rs. 5,000 in a lump sum. During a new fund offering (NFO), investors can participate by investing a minimum amount of Rs. 5,000. A lump sum investment amount of Rs. 5,000 is affordable to most investors.

However, if you are not able to invest Rs. 5,000 in a lump sum, you can always choose to invest through the systematic investment plan (SIP) mode. Most fund houses allow investors to start a SIP with a minimum amount of as low as Rs. 100. The SIP minimum amount of Rs. 100 is affordable to most investors.

What should be the ideal amount to invest in mutual funds?

The ideal amount to invest in mutual funds depends on your financial goals. Let us understand this with the help of an example of planning for a child’s higher education. You can arrive at the ideal amount for investment as follows:

  1. Investment time horizon: Consider the child's current age and the age at which they will take admission for higher education for a particular course. It will help you arrive at the number of years you have in hand to build a fund for your child's higher education.
  2. Future cost of education: Consider the current cost of the course for which the child would like to enrol when they grow up. Look at the past education inflation trends and arrive at a suitable inflation rate at which education costs are expected to rise in the future. Now, based on the expected future inflation rate and current course cost, calculate the course's future cost. With this, you have arrived at the education fund you need to build.
  3. The ideal amount to invest: You already know the investment time horizon and the amount you need to accumulate. Based on your asset allocation and expected rate of return, calculate the amount you need to invest regularly to reach your financial goal. This is the ideal amount that you need to invest. You can start a SIP with this amount.

Start investing with whatever amount you have

If you don’t have the ideal amount required to start investing, you can start with whatever amount you have and increase the SIP amount in the future. If you find it difficult to start with a lower amount, you can always start a SIP with a minimum amount of Rs. 100.

To start investing in mutual fund schemes with the ideal or minimum amount as per your appropriate asset allocation, download the Glide Invest App from Google Play Store or Apple App Store and get started.

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