"Mutual Funds in India: Complete Beginner’s Guide with ET Money & Zerodha (2025)"

 

Mutual funds have subtly become one of the most useful and effective instruments for generating wealth in a world where financial literacy is still lagging behind lifestyle inflation. Being an expert in the stock market is not necessary. Monitoring the Sensex every morning is not necessary. Mutual funds take care of the rest; all you need is a little patience, clarity, and discipline.

Everything you need to know about mutual funds is explained in plain English in this blog. This is the only book you will need to understand how they operate, how to pick the best fund, how to manage risks, and how to use contemporary platforms like ET Money and Zerodha Coin.

Really, what is a mutual fund?

A mutual fund is just a group investment plan. A professional known as a fund manager oversees the management of a sizable fund that many people have pooled their money into. The pooled funds are invested in a variety of assets by this fund management, including equities, bonds, gold, and a combination of these. Like stock in a firm, each investor receives units in the fund in exchange. Depending on how well the fund's assets perform, the value of your investment may increase or decrease. 

Simply put: You are purchasing many stocks and bonds. You are purchasing a professionally managed investment basket. Your life is made simpler and your risk is spread.

What Makes Mutual Funds the Best Option? 

Mutual funds are popular for many reasons, particularly for those who wish to increase their wealth without committing to full-time investing. Minimal entry barrier: You can begin investing with just ₹100. Diversification: Your funds are dispersed over several businesses and industries. Professional management: Leave your portfolio to the professionals. You can choose between flexible alternatives that are aggressive, prudent, short-term, or long-term. Liquidity: The majority of money can be spent within a day or two. Tax Efficiency: Certain ETFs provide Section 80C benefits.

Mutual Fund Types (According to Investment Objectives) 

1. Funds for equity Invest mostly in equities. Perfect for generating long-term wealth High potential for growth but also increased volatility Ideal if you can tolerate ups and downs and have a long horizon. 

2. Funds for Debt Put money into bonds, government securities, and other fixed-income investments. Consistent and predictable profits Reduced risk, appropriate for short- to medium-term objectives Frequently used to save money for immediate needs or to park emergency finances

3. Hybrid funds Growth and some stability are provided by a debt-to-equity balance. Perfect for people who are new to the equity markets or are taking on a minimal degree of risk. 

4. Index funds represent a certain market index, like the Nifty or Sensex Minimal management and passive investment fees Perfect for people who expect the market to grow steadily 

5. Section 80C tax deductions are offered via the Equity-Linked Savings Scheme, or ELSS. The shortest tax-saving option is a three-year lock-in. Perfect for salaried professionals looking for development and tax advantages

Models of Mutual Fund Investing: 

ET Money vs. Zerodha Coin Let's examine the fundamental ideas and operations of two of India's most reliable platforms. 

ET Money:

Streamlining Individual Financial Management Concept: Based on the notion of "goal-based, commission-free investing," ET Money aims to make investing easy for the average Indian. How It Operates, You respond to a series of enquiries regarding your financial objectives. The software makes investment recommendations according to your time horizon and risk tolerance. Since there is no middleman commission, you invest in direct plans, which yield larger returns. Tracking, pausing, and updating SIPs is simple. provides credit score updates, insurance monitoring, and budgeting tools. 

Bonus Idea: Smart SIP – This function adjusts your SIP amount dynamically according to your financial situation and market conditions.

Zerodha Coin: 

Investing in Mutual Funds on Your Own The idea behind Zerodha is to empower investors by giving them control and transparency. The Process: Since mutual funds are kept in your Demat account, you have complete control over them. There are no hidden fees because only direct mutual fund plans are available. Your Zerodha trading account is integrated. Perfect for traders, self-students, and those who have already used Zerodha for stock investments. 

Bonus Idea: Flat Fee Model – Previously charged ₹50/month, now totally free, this model keeps expenses extremely low.

Systematic Investment Plan (SIP):

The Influence of Self-Control SIP is a way to invest consistently (monthly or quarterly) in a fund; it is not a product. 

The Power of SIP: promotes financial self-control utilises rupee cost averaging to purchase more units during slow market conditions. reduces the chance of timing reduces the cost of investing (you can start with ₹100). Over time, compounding becomes more effective. Setting up a SIP takes less than five minutes, regardless of whether you use ET Money or Zerodha.

Recognising the Dangers of Investing in Mutual Funds

1. Risk to the Market This is the chance that if the stock or bond markets do poorly, the value of your fund could decrease. mostly found in hybrid and equity funds. 

2. Risk of Interest Rates Bond prices tend to decline when interest rates rise. Debt funds are impacted by this. Even if you believed that a debt fund was "safe," its net asset value may decline. 

3. Risk to Liquidity During a crisis, certain funds, such as small-cap or credit risk funds, could find it difficult to sell investments.

4. Credit Risk Debt funds carry the risk that the issuer of the bond (company or govt) may default on payments.

5. Fund Manager Risk Every mutual fund is run by a fund manager. If the manager makes poor decisions, performance may suffer.

6. Concentration Risk Some funds invest heavily in one sector or a few stocks. This increases volatility.

Ways to Effectively Manage Risk 

1. Recognise your level of risk tolerance Avoid selecting aggressive funds if you have short-term goals or are risk averse. 

2. Spread Your Bets Across Fund Types Index, hybrid, debt, and equity funds can all be used to balance performance. 

3. Have an Action-Based Plan Align the fund type with the desired time frame: Debt/Liquid funds under three years Long-term (3–5 years): Index/Hybrid funds Over five years: equity funds

4. Use SIPs Instead of Lump Sum SIPs help you minimise the stress of market timing by averaging your costs.

5. Continue using quality funds Don't be fooled by gaudy advertising or a fleeting track record. To evaluate consistency, fund management history, and expense ratios, use websites such as ET Money or Zerodha. 

6. Review Every Year Check the performance of your money once a year. However, don't get alarmed by brief market declines.

Mutual fund taxes 

You can prevent surprises and make better plans if you understand taxes. 

Mutual Funds for Equity Holding for less than a year: 15% short-term capital gains tax Holding for more than a year: 10% tax is applied on long-term capital gains over ₹1 lakh. Mutual Funds for Debt Holding for less than three years: Gains are added to income and subject to slab tax. 

Having held for more than three years: 20% tax with indexation benefits ELSS Funds Three-year lock-in Section 80C allows for a deduction of ₹1.5 lakh.

Conclusion: 

An All-Inclusive Fund Mutual funds don't belong to "rich people only." Everyone can use them, including retirees, professionals, homemakers, and students. You could: ✅ Begin with ₹100. Select the time window and degree of risk

✔ Make passive income over several years

✔ Keep tabs on everything from your phone. Regardless of your preference for Zerodha Coin's self-driven strategy or ET Money's coached approach, the important thing is to get started right away, maintain consistency, and never stop learning. You're not running late. You're exactly on schedule.

A Few Key Takeaways 

Investments in mutual funds are diversified and professionally managed. SIPs ease the stress of market timing and promote consistency. Use websites such as Zerodha Coin (DIY, control) or ET Money (simple, guided). Recognise risk, make appropriate financial decisions, and exercise patience. Avoid pursuing rapid returns. Consider the long term.

Disclaimer: 

Investing in mutual funds exposes you to market risks. Before investing, please carefully read all documentation pertaining to the scheme. This blog is not meant to provide financial advice; rather, it is meant to be instructive.

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