Mutual funds are collective investment schemes. They collect money from investors and invest in shares, bonds, bank deposits and gold. They are regulated by the government body, SEBI. There are strict rules mutual funds have to follow and hence the chance of fraud is very low. Usually equity mutual funds invest in 50 to 60 company stocks. There will be a fund manager for a scheme and he has analysts who monitor the performance of the companies and do lot of research. Based on the research they change the stocks. Normally a person will not be able to do that much research. By investing through equity mutual funds you can eliminate the risk associated with investing in one company.
You can get to know about good equity mutual funds from the research reports of stock brokers or from magazines like Manorama Sampadyam.
In order to invest in mutual funds you can approach a stock broker or a bank. They will do your KYC registration and fill the forms. You will have to give a photo, address proof, id proof, Pan card copy, cancelled bank cheque and sign the required forms. Alternatively you can go directly to the office of the particular mutual fund company and they will help you invest in their schemes. If you are internet savvy, you can invest online also. If you buy directly from the mutual funds company, then you can save some cost as direct schemes do not carry cost of commission paid to agents.
A financial plan will help you build an investment portfolio with mutual funds and other investment avenues based on your goal requirements.