How to Invest in An Equity Fund on a Monthly Basis – The Details

How to Invest in An Equity Fund on a Monthly Basis

An equity fund is a type of fund that invests its assets in various types of stocks. The common name of an equity fund is a mutual fund. The best part of equity funds is they offer long-term investment opportunities with greater profit margins. If you are planning to invest in an equity fund then you have to find the best fund for you based on CRISIL rating, size of AUM, performance, etc. Then you have to decide how much you want to invest in an equity fund.

What are Equity Funds?

According to many investment experts, equity funds are open or closed-type funds and they mostly invest in stocks based on their investment objective. The stocks where an equity fund investment can be bond funds or money funds. There are various types of equity funds available and they are determined by market capitalization, investment style, etc. Some common types of equity funds are –

  1. Large Cap Funds
  2. Mid Cap Funds
  3. Large and Mid Cap Funds
  4. Small-Cap Funds
  5. Multi-Cap Funds
How to Invest in An Equity Fund on a Monthly Basis
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How Equity Funds Work

The working procedure of an equity fund is very simple. This type of fund collects money from different investors and then invests the money in various stocks. Depending on the gain and loss of the investments investors receive their profits. Moreover, an equity fund is a type of business and it has various expenses. So, equity funds charge an annual fee depending on the investment amount, and in most cases, it is 2.25 percent of the total investment. In equity funds, the stocks are selected based on the objectives and investment style. So, before choosing an investment fund you should find out how they will invest your money.

Detail Steps to Invest in an Equity Fund on a Monthly Basis

Investing in an equity fund is a step-by-step process. There are many ways you can invest in equity funds. Therefore, you have to decide how you want to invest money in equity funds. You can invest in equity funds via –

Direct Investment with the Fund House: If you have basic investment knowledge then you can invest in equity funds directly with the fund house. You have to provide some documents like a valid photo id, proof of address, passport size photograph, etc.

Investment through a Broker: You can also invest in equity funds with the help of a broker. Here, the broker will take care of everything and you don’t have to worry about any paperwork or other procedures. The investment broker will take care of everything.

Online Invest via Website: There are lots of platforms available online where you can invest in equity funds via a website. What you have to do is, fill up the form with the required information and then submit it online. Moreover, you have to submit an e-KYC to invest in equity funds.

Online Investment via Mobile App: Lots of equity fund houses have their official mobile app that you can download and use on your smartphone. Similar to investing via a website you have to fill up the form with the required information and then submit it online. Once your profile is approved, you are ready to invest in equity funds.

After choosing any of the investment methods from the above list, you have to follow the below steps accordingly!

Step – 1: Identify your Investment Goal

The very first step of investing in an equity fund is, you have to identify your investment goals. You have to determine what type of financial goal you want to achieve through equity investment. If you are looking for a long-term investment then it will be better to invest in large-cap equity funds. Because this type of equity fund has a long-term investment plan. On the other hand, if you are investing for a shorter-term goal then bond-type mutual funds will be the right choice for you.

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Step – 2: Determine the Investment Budget

The next step is to calculate your investment budget. This is a very important step because it plays a very important role in the outcome of your investment as well as your future financial condition. Different equity funds have different minimum investment rage and it varies from $0 – $3000 or more. So, if you pick a fund that has a minimum investment requirement of $0 then you can invest as low as $1. There is no restriction on the upper limit. You can invest as much money as you can in an equity fund. However, you have to maintain the minimum investment requirement. So, if the minimum requirement is $100 then you have to invest at least $100 or more. So, depending on your investment budget, you have to pick the equity fund.

Step – 3: Research and Choose an Equity Fund

You just can’t pick an equity fund and invest in it. You have to research the funds and identify the best fund for you that meets your investment goal. While researching an equity fund you should check the following factors –

  • You must check the previous performances of an equity fund because it will give you a clear idea about the fund’s performance and the potential risk of investing in this fund. Then, you should compare the past performance of similar funds and narrow the list.
  • You also have to check the cost of an equity fund. Different funds charge different types of fees and annual charges so, you have to find a less expensive equity fund. It is a very important factor because annual expenses can drastically impact your profit.
  • Different mutual funds charge a sales commission known as load fees. However, there are many “no-load” equity funds available and if you choose this type of fund then you will be able to save money on sales commission.

Step – 4: Open an Investment Account

Once you have decided what type of equity fund you want to invest your money then the next step is open an investment account. You can open an investment/brokerage account online or offline by visiting the nearest brokerage house. You have to be at least 18 years old to open a brokerage account. You have to provide a valid photo id and proof of address to open an account. After opening an account, you have to deposit funds to the account, and then you will be able to invest in equity funds.

Step – 5: Invest in Equity Funds

If you have successfully completed the above four steps then you are ready to invest in equity funds. The investment process of equity funds is a bit different from trading shares. Usually, equity funds are priced at the end of the trading day based on the NAV. So, if you place an order after the market is closed then receive the next day’s closing NAV as of the price.

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List of Best Equity Funds to Invest in 2022

Equity Mutual FundsPreferred SharesPrivate Equity Fund
Axis Bluechip FundMirae Asset Large Cap FundParag Parikh Long Term Equity FundUTI Flexi Cap FundAxis Midcap FundKotak Emerging Equity FundAxis Small Cap FundSBI Small Cap FundSBI Equity Hybrid FundMirae Asset Hybrid Equity FundWashington Mutual Investors FundThrivent Mid Cap Stock FundInvesco Small Cap Value FundJP Morgan Income FundInvesco Equity and Income FundCompass Diversified Holdings Landmark Infrastructure Partners LPEnergy Transfer Operating LPGlobal Ship Lease Inc. InfraCap REIT Preferred ETF Innovative Preferred Plus Fund Principal Capital Securities FundNuveen Preferred Securities & Income FdCherry Hill Mortgage Preferred AGlobal Net Lease Preferred StocksVirtus InfraCap U.S. Preferred Stock ETFVanEck Preferred Securities ex Financials ETFCAI Capital Partners, CanadaFalfurrias Capital Partners, USRenovus Capital Partners, USGMT Communications PartnersGauge Capital, US Detong Capital China WindRose Health Investors, US Via Equity DenmarkImperial Capital Group, CanadaVendis Capital, BelgiumSeaport Capital, USSynova, UKTrinity Hunt Partners     

FAQs about How to Invest in An Equity Fund on a Monthly Basis

Can I invest in equity funds monthly?

Yes, you can invest in equity funds monthly. If you don’t have a large amount of money to invest at once then you can choose a Systematic Investment Plan (SIP.) This way you will be able to invest money every month in a small amounts like $100, $200, etc.

What mutual funds pay monthly?

Some of the best monthly paid mutual funds are –

  • SBI Magnum MIP Fund
  • Birla Sunlife MIP II Savings 5 Fund
  • SBI Magnum MIP Floater Fund
  • ICICI Pru MIP Scheme

Is automatic investing a good idea?

The answer to this question depends on quite a few things. If you want to save money on direct deposit and balance transfer then automatic investment will be a good idea. Moreover, if you are running low on budget then automatic investment will ensure that you are investing a fixed amount every month to increase your investment and profit.                


Last Updated on August 7, 2022 by Ana S. Sutterfield

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