After I invest in a mutual fund, how soon will I get the certificate or statement of account?

Q1. After I invest in a mutual fund, how soon will I get the certificate or statement of account?
As an individual investor, you must have definitely considered mutual fund investments as a part of your portfolio. They offer you a great opportunity to diversify your investment portfolio across different investment instruments like equity, debt, and gold and create a portfolio that can potentially help you achieve your financial goals. There are mutual funds that invest exclusively in equity instruments or in debt instruments or in a combination of the two. Whatever your return expectation and risk-appetite, there is a mutual fund that can potentially meet your requirements.

Thus, if you are an investor who doesn’t really understand investing or you don’t have the time to invest on your own, then mutual fund investments can be a great choice. The best way to start your investment journey with mutual funds is to:

• Define your goals (child’s education, buying a house, etc.)
• Assess your risk profile
• Select the mutual fund schemes that can help you meet the desired returns and are aligned with your risk profile
• Choose whether you want to make a lumpsum investment or start a Systematic Investment Plan (SIP) , or do a combination of both

You could invest directly with the mutual fund offline by visiting their branch or you could approach a broker offline. Alternatively, you could invest online through the official website or through the many personal finance apps.

After you have invested in the mutual fund successfully, you will receive a statement of account from the mutual fund. These are generally sent to you as an investor every 6 months, every time you invest in the mutual fund or if you redeem anything. You can also download the statement for your account instantly from the respective AMC website.

The statement of account contains a summary of all your investments with the particular fund house. The statement can contain the following details:

• Personal and bank details: This section will show your name, address, e-mail ID, and contact number. It is shared with you so that you can ensure they have all your correct details and can make the necessary changes in case you want to change any of the details.
• Folio number: This is your unique identification number with the mutual fund. You can use this number for all your investments with a particular mutual fund.
• Cost and value of your investments: This section shows the cost of your investment, the units allotted, and the current value of your investments based on the NAV as on the date of statement.
• Advisor’s name, EUIN and PAN details: If you have invested through an advisor, then this section will show his name and code and EUIN number.
• Transaction summary: This section contains the details of your transactions including purchase / redemption, and whether you have opted for SIP or SWP.

Now, you could also receive a Consolidated Account Statement (CAS) which is a combined statement of all your transactions made during the month in all your mutual funds.

Q2. What are the differences between active funds and passive funds in regards to investment funds? How can they impact your investing?
Mutual funds are professionally managed investment vehicles that pool the money of many investors and invest in a diversified or specific way for the benefit of all the investors. Your goals define the mutual fund you should invest in. Broadly, mutual funds can be divided into active and passive mutual funds.

Following are the main differences between the two:
Active investing is for investors that would like to take a higher risk and potentially get a higher return, whereas passive funds are for investors who would like an exposure into investing with a lower risk appetite.

Q3. What is the meaning of a lock-in period in mutual funds?
Mutual funds are investment vehicles that pool together money from many investors and invest in equity, debt, gold, etc. They are professionally managed and ensure that you can create a diversified portfolio of securities that have varying levels of risk and return. More importantly, mutual funds can potentially help you achieve your financial goals that are spread across multiple time frames like short-term (1 year or less), medium-term (1 to 5 years), and long-term (more than 5 years).

Broadly, mutual funds can also be divided into close-ended mutual funds and open-ended mutual funds. While open-ended funds have no such requirement, close-ended mutual funds have a ‘lock-in period’ of usually 3 years. This means that the investor cannot withdraw money from the fund for a period of 3 years since the start of the investment. This is done because too many redemptions at an early stage could disturb the stability of the mutual fund and the funds available for investing. Too much redemption could also mean that the fund manager might have to prematurely exit the fund’s investments to meet the redemption of the fund, which could hurt the returns of the whole fund. The lock-in period helps in preserving the liquidity that the fund enjoys and maintaining the interests of the investors as a whole.

While the main purpose of a lock-in period is to preserve the value of the investment, you must ensure that your investment time horizon is at least 3 to 5 years before investing in funds that have a lock-in period.

This answer should not be considered as 'investment advice'. Kindly consult your financial/tax advisors to determine the financial implications with respect to investing in Mutual Funds. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.