What is the Mutual Fund Minimum Investment in India | Complete Guide

Investing wisely is crucial for achieving long-term financial goals and securing a prosperous future. When considering investing in Mutual Funds, one crucial factor to understand is the concept of minimum investment. The minimum investment is the smallest amount of money required to start investing in a Mutual Fund.

Understanding this minimum requirement is essential for investors, as it determines the initial capital needed to enter the fund and can impact investment planning and strategy. In this post let us look at the

What is the Minimum Investment Requirements?

The type of Mutual Fund determines the minimum investment required in India. For lump-sum investments, SEBI requires a minimum of Rs. 100, and for SIPs, Rs. 500. Some Mutual Funds, nevertheless, could have greater minimum requirements. Prior to beginning your investing adventure, always review the fund's criteria.

How Does Minimum Investment Work?

The smallest sum of money required to begin investing in a Mutual Fund is known as the minimum investment. Depending on the fund, this sum might start as little as Rs. 100 in India. Fund managers may screen serious investors and manage funds more effectively by requiring higher minimum investments. Additionally, they reduce the burden of managing an excessive number of minor accounts. However, funds that have smaller minimum investments make it simpler for new investors to get started. Make sure the fund meets your goals and budget by always reviewing its criteria.

Understanding Mutual Fund types and Minimum Investment Amount

Mutual Funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds and other securities. These funds are managed by professional Fund Managers, who make investment decisions based on the fund's objectives and market conditions. The different types of Mutual Funds offered are:

1. Equity Mutual Funds:

Equity Mutual Funds primarily invest in stocks or equity-related instruments of companies across different sectors and market capitalisations. These funds aim to provide long-term capital appreciation by using the growth potential of the equity markets. You can start investing in equity Mutual Funds with a minimum amount as low as ₹100, depending on the specific fund and scheme.

2. Debt Mutual Funds:

Debt Mutual Funds primarily invest in fixed-income securities such as government bonds, corporate bonds, money market instruments and other debt securities. These funds aim to provide stable returns while preserving capital. The minimum investment for debt Mutual Funds usually begins at ₹100, based on the chosen fund and scheme.

3. Hybrid Mutual Funds:

Hybrid Mutual Funds, also known as balanced funds, invest in a mix of equity and debt instruments, providing a balanced investment approach. These funds aim to offer capital appreciation along with income generation while managing the risk through asset allocation. Usually, Hybrid mutual funds allow you to start with a minimum investment of ₹100, depending on the specific fund and scheme.

For Systematic Investments Plans (SIPs), the minimum investment typically ranges from ₹500 to ₹1,000, while for one-time investments, the amount varies from ₹100 to ₹5,000.

Examples of Mutual Fund Minimum Investment

Aditya Birla Sun Life Digital India Fund

The Aditya Birla Sun Life Digital India Fund invests in companies that leverage technology and digital services. With a focus on long-term growth, this fund has delivered a five-year return of around 27.46% annually. It has an expense ratio of 0.87%, making it cost-efficient. The fund primarily invests in the technology, communication, and media sectors. Investors looking to capitalise on India's growing digital ecosystem find it an appealing option for their portfolios.

HDFC Small Cap Fund

HDFC Small Cap Fund aims for high capital appreciation by investing in small-cap stocks. Over the past five years, it has delivered an annualised return of around 35.8%, outperforming many peers. The expense ratio is 1.61%, which is higher than average, but the returns justify the cost. The fund’s portfolio is diversified across various sectors, primarily focusing on emerging, high-growth companies. This fund suits investors willing to take on higher risk for potentially higher returns in the long run.

Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund is a popular ELSS fund that provides tax benefits under Section 80C of the Income Tax Act. It focuses on long-term growth by investing in large-cap and mid-cap stocks. Over the last five years, the fund has posted a return of around 24.70% annually. The expense ratio stands at 1.58%, which is relatively low, making it cost-effective for investors. This fund is suitable for investors looking for tax-saving options with strong growth potential.

SBI Bluechip Fund

The SBI Bluechip Fund focuses on large-cap stocks, aiming for consistent growth with lower volatility. It invests in well-established companies. The fund has delivered a 5-year annualised return of 22.34%. The expense ratio is 1.5%, which is quite reasonable. This fund is a good option for investors looking for stability and long-term growth, focusing on blue-chip companies that tend to offer more safety in volatile market conditions.

Axis Long Term Equity Fund

Axis Long Term Equity Fund is an ELSS that aims to provide long-term capital appreciation. It invests primarily in large-cap and mid-cap stocks. The fund has consistently outperformed its peers, delivering a 5-year annualised return of 18.21%. With an expense ratio of 1.53%, the fund provides a solid return while keeping costs low. The fund's diversified portfolio and tax-saving benefits under Section 80C make it a top choice for long-term investors seeking capital growth and tax advantages.

What determines the minimum investment requirement for Mutual Funds?

The following factors determine the minimum investment requirement for Mutual Funds:

• Type of Mutual Fund: Different types of Mutual Funds may have varying minimum investment requirements. For instance, equity funds may have a different threshold compared to debt funds or hybrid funds.

• Risk Profile: The risk profile of the Mutual Fund scheme can influence the minimum investment requirement. Funds with higher risk profiles may have a higher minimum investment threshold.

• Regulatory Guidelines: Regulatory authorities such as SEBI may prescribe certain minimum investment norms that financial institutions need to adhere to.

• Fund Objectives: The investment objectives of the Mutual Fund scheme play a crucial role in determining the minimum investment requirement. Funds with specific investment objectives may have different minimum investment thresholds.

Factors To Consider while investing in SIP

1. Investment Goals

Always start by factoring your investment goals. Know why you are investing in the market, as this can help you decide the type of funds you are choosing. Your financial objectives play a key role in selecting the right Mutual Fund type for you to invest in. For example, equity funds are ideal for long term goals due to their growth potential over time, whereas debt or hybrid funds may be appropriate for achieving short to medium term financial goals.

2. Risk Appetite

As per the type of investment you choose, Mutual Funds come with various levels of risk. For example, debt funds are safer but provide lower returns, whereas equity funds are usually linked to higher risk levels but also offer the possibility of larger profits.

3. Investment Horizon

This is the period that you plan to invest in. Choosing equity funds for long term investments (around 4 to 8 years or more) and opting for debt funds might be a choice for short term goals (within 1 year or up to 3 years).

4. Expense Ratio

The cost ratio represents the fee imposed by the fund company for overseeing your investment portfolio. Go for funds with an expense ratio to safeguard your returns against erosion.

5. Performance of Mutual Funds

Remember to check the past performance of the Mutual Funds you are choosing. They provide information about how a fund has handled market swings in the past. Reviewing the fund's performance over time is advised before making any choices. 

How to invest in Mutual Funds through ICICI Bank?

Investing in Mutual Funds through ICICI Bank is a streamlined process designed to provide convenience and accessibility to investors. Whether you prefer online platforms or seek personalised assistance, ICICI Bank offers multiple channels to facilitate Mutual Fund investments. Here are the steps to invest in Mutual Funds through ICICI Bank:

Through Net Banking

• Go to your Net Banking account and invest in Mutual Funds through ICICI Bank.

• On the 'Investments and Insurance' page, choose 'Buy Mutual Funds.'

• Look through the different schemes, select your favourite, and filter based on your preferences. You can also determine the potential returns and plan your investment strategy, whether through SIP or Lump Sum investment methods, using the Mutual Fund Calculator to guide your decisions.

• Click 'Invest Now,' type in the amount, then select 'Lump Sum or SIP'.

• Examine the information and be sure to finish the investment.

Through Mobile App

• Get the iMobile app from the app store, then enter your login information.

• Click 'Invest' tab and then click 'Mutual Funds.'

• Look over the available schemes, verify information such as performance and NAV, and select the one you wish to invest in.

• Enter the sum, choose a lump sum or SIP, check the information, and validate your investment.

Assisted Channels:

Customers can also visit any ICICI Bank Branch or call 1800 1080 for assistance with Mutual Fund investments. Use a Mutual Fund calculator or SIP calculator to estimate the returns you can potentially earn from your investments.