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Is It Possible For An Organization/Company To Invest In A Mutual Fund?

Mutual funds are one of the most popular and common investment tools in India. They have attracted the attention of beginner and experienced investors in the last few decades and remain a top choice for both men and women. The wide variety of choices like equity funds, debt funds, and hybrid funds makes mutual funds an excellent instrument to create wealth. Moreover, they allow investors to invest passively as all decisions are taken by the fund manager. This offers growth without much time and effort spent.

If you have been investing in mutual funds, you are likely on the right track to financial freedom. However, did you know that apart from investing in mutual fund schemes individually, it is also possible to invest in them as an organization or a company? Keep reading to find out more.

Can an organization or a company invest in mutual funds?

Yes, companies can invest in mutual funds to generate more funds and use any surplus cash reserves to create wealth. A lot of companies also park their clients’ money in mutual fund schemes. Just like how an individual investor would choose a suitable mutual fund scheme, clear the Know Your Customer (KYC) process, and choose a suitable method of investment – a lump sum or SIP (Systematic Investment Plan), a company too can follow the same steps. Moreover, a company can contact the asset management company (AMC) directly or invest in mutual funds via a broker.

What are the documents required for an organization or a company to invest in mutual funds?

Here is the list of documents required by an organization or a company to invest in mutual funds:

  • A resolution by the board to invest in a mutual fund scheme
  • A list containing the names of authorized signatories
  • All the records of the company accounts
  • Balance sheets of the last two financial years
  • The company’s shareholding pattern
  • All relevant photographs
  • Proofs of identification and address, such as the PAN
  • Director Identification Number (DIN) of all the directors
  • A cheque drawn in the name of the mutual fund scheme

What shouldan organization or a company keep in mind while investing in mutual funds?

It may be hard to take the SIP route for companies as the cash flow of a business can be unpredictable. However, a company can use the lump sum investment method. In addition to this, companies can also invest in short-term mutual funds like liquid funds to park their surplus funds. Liquid funds have a maturity period of up to 3 months and can be a good way to generate money for an organization at low risk.

To sum it up

Mutual fundsare a versatile investment that can offer both individuals and organizations many benefits. You can use the Tata Capital Moneyfy app to take advantage of these benefits and start investing in different mutual fund schemes.