With increasing awareness, the words ‘mutual funds’ have become a common name in the predominantly middle-class household in India. The statistics too confirm the rise in popularity of this wealth generation vehicle. According to a report published by AMFI, the investors have invested Rs 51,000 crore in various mutual fund schemes in October. With the latest infusion, the total inflow in Mutual Fund scheme has reached to Rs. 25 lakh crore in the first seven months of the year. This proverbial change has happened due to demonetization that resulted in low interest rates on bank deposits.
Mutual Funds India attract the millennial generation of India (who otherwise is humongous spender on electronic gadgets, motor bikes and cars) a bit more. They actually inculcate a financial discipline and saving habit among them. Here are the tips that you need to consider before investing in them:-
Make a financial plan- Create a financial plan and discuss it with your spouse, and avoid taking suggestions from your friends and relatives.
Select a mutual fund carefully- Before selecting a mutual fund, it is important to gauge the time frame. Not knowing exactly about the time frame means you are selecting a wrong mutual fund. Secondly, you should not select the toppers because they may not necessarily give you the returns as promised. The investor should pump money in a mutual fund that offers good track record for a period of 3 to 5 years. The investor should also know where the wealth manager will invest their money and what are the risks associated with it.
Track the market- It is important to have a keen eye on what is happening around the market. If you cannot track the market on a regular basis, then diversify your investment with sectoral funds. Don’t buy a mutual fund just because your friend has invested in it. Research exhaustively ,and assess the risk profile, financial goal and your saving capability. Based on that you can select a mutual fund India!
Hire a wealth manager- If you think that you are new to this market and can’t do this alone, hire a financial planner. The professional will track the changes and consistency of returns. The fund management house should have black and white policies on how they handle the investment processes as it would eliminate the possibilities of whims and wishes
Avoid funds with a high risk- Avoid funds that carry a high risk. The failure to do so can lead to erosion of funds.
Sell your mutual funds- One of the most commonly asked questions, “when to sell the mutual fund units?” We suggest to sell the units on achievement of particular investment goal. Also, when your mutual fund scheme is not able to generate returns for more than one year, you should sell it. Compare the performance of the scheme with peers. Or if there is any change in the structure of the scheme or change in the investment style, it is a good reason to sell your investments.
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Raghav Mehera Joined: January 6th, 2017 Articles Posted: 9
