What is the Minimum Investment for Mutual Fund?

Mutual funds are a popular investment choice, especially if you want to diversify your portfolios. They provide the benefits of professional management, exposure to multiple asset classes, and the potential for long-term growth.

However, if you are a new investor, it is essential to understand the minimum investment criteria you start. This will help ensure the fund fits your financial plan and aligns with your budget and goals. In this guide, we will help you through the concept of the minimum SIP amount in mutual funds and more.

Understanding Minimum Investment in Mutual Funds

The minimum investment in a mutual fund is the minimum money you need to invest to get started. This information is crucial for first-time investors who ask, “What is the minimum investment for mutual funds?” 

Each mutual fund sets its minimum investment limit, ranging anywhere from as little as ₹100 to several lakhs, depending on factors such as the fund’s objectives, structure, and associated management costs.

Funds with higher minimum investment requirements are for institutional investors or individuals with substantial capital. In contrast, mutual funds with lower entry points are designed to be more approachable for retail investors, making it easier for regular individuals to participate and build their wealth over time. 

Minimum Investment Requirements Across Various Types of Mutual Funds

These are the minimum investment for mutual funds for different types of funds:

• Equity Mutual Funds

Equity mutual funds primarily allocate their investments to stocks or equity-linked instruments of companies spanning various sectors and market capitalisations. These funds focus on delivering long-term capital growth by tapping into the growth opportunities presented by the equity markets. 

Depending on the particular fund and scheme, you can begin investing in equity mutual funds with a minimum amount starting as low as ₹100.

• Debt Mutual Funds

Debt mutual funds mainly invest in fixed-income instruments like government bonds, corporate bonds, money market instruments, and other debt securities. Their primary objective is to offer steady returns while safeguarding the invested capital. 

The minimum investment amount for debt mutual funds typically starts from ₹100, though it may vary depending on the specific fund and scheme selected.

• Hybrid Mutual Funds

Hybrid Mutual Funds, often referred to as balanced funds, allocate investments across a combination of equity and debt instruments, offering a diversified investment strategy. Their objective is to deliver capital growth while generating income, and effectively managing risk through proper asset allocation. 

Typically, you can begin investing in hybrid mutual funds with a minimum amount of ₹100, though this may vary based on the particular fund and scheme.

SIP vs. Lump Sum: Comparing Minimum Investment Requirements

Systematic Investment Plans (SIPs) offer investors the flexibility to invest a fixed amount at regular intervals, typically monthly. This approach provides an easy and accessible way to build wealth over time. 

In India, the minimum investment in SIP usually begins at ₹500 per month, although some fund houses allow a minimum SIP amount of as little as ₹100. The low entry barrier makes SIPs attractive to first-time investors or those aiming to cultivate a disciplined saving habit. 

In contrast, lump sum investments involve a single, one-time investment in a mutual fund scheme. The minimum investment amount for lump sum contributions generally starts at ₹500 to ₹1,000. However, certain mutual funds may require higher minimum amounts, such as ₹5,000 or ₹10,000, based on the fund house’s policies. 

Lump sum investments are well-suited for individuals with a large sum of disposable income who wish to invest it all at once. 

Minimum Investment Amounts in Mutual Funds Offered by Leading AMCs in India

Follow this table to get an idea of how much the minimum amount for mutual funds offered by India’s top AMCs:

Why Do Minimum Investment Requirements Vary Across Different Mutual Funds?

The minimum investment amount of any mutual fund scheme depends on different factors. These are the factors that influence the minimum investment:

• Fund Objectives

The minimum investment requirement of a mutual fund scheme is largely influenced by its investment objectives. Schemes with distinct investment goals often set varying minimum investment amounts to align with their specific strategies.

• Type of Mutual Fund

Different categories of mutual funds often come with varying minimum investment limits. For example, the minimum investment amount for equity funds may differ from that of debt funds or hybrid funds.

• Regulatory Guidelines

Regulatory bodies like SEBI may set specific minimum investment guidelines that financial institutions are required to follow.

• Risk Profile

The risk profile of a mutual fund scheme can impact its minimum investment requirement. Schemes with higher risk levels often set a higher minimum investment threshold.

How to Begin Investing in Mutual Funds on a Small Budget?

If your budget is low and you are a beginner, you may start with a mutual fund minimum investment of ₹100 – ₹500 with SIP mode. To get started, you can open your demat account with us.

We at Torus Digital, offer you a 2-in-1 and 3-in-1 demat account, where you can open your Demat account without any account opening fees. The best thing is that you do not need to pay any annual fees to use our account.

After that, you can invest in direct mutual funds where you can get the maximum returns from your MF investment.

Summing Up

Mutual funds present an excellent opportunity for both beginners and seasoned investors to build their wealth. With SEBI’s regulations, they are highly accessible, with minimum SIP amounts starting as low as ₹100 for lump-sum investments and ₹500 for SIPs. 

As the mutual fund industry continues to evolve, these minimum investment limits may be reduced even further, making them increasingly affordable for a wider range of investors.

Open your Demat account with us today and start investing with as low as ₹100.