Tips on Investing in Mutual Funds

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As discussed in the previous article, on investment guide for beginners in India; here taking our talk to the next level, we are going to educate on how to invest in Mutual Funds.

If someone is looking towards investing in Mutual Funds, one needs to be educated on all aspects of it. However, before diverting our focus on those tips, we pretty straightforward move to what actually is Mutual Fund.

What is a Mutual Fund?

A Mutual Fund is a programme run by the asset management companies and their professionals, which collects money from the investors and invests the money on investors’ behalf. In return, these companies charge a small fee.

How to invest in Mutual Funds?

Investing in Mutual Funds needs a proper analysis of goals and requirements of your life. Keeping your goals and objectives clear, allow you to invest properly and in best strategized manner. Here are the tips:

Keep Personal Goals clearly in mind

Before investing in any mutual Funds, you need to be clear in what your goals are! Investing in Mutual Funds is of various types, depending on the goals and money needed at various stages of life. Thus, take a pen and paper and analyze what your goals are and what money is required to complete those goals.

Choose the Asset Management Company and Fund Manager carefully

Mutual Funds

When you are ready with your goals and money requirements at a particular stage of life, you need to make a choice of Asset Management Company and fund manager very carefully. While, banks where you’re having an account with provide mutual fund options, there is a very important step in choosing the fund manager. Go through the details of fund manager and his returns over the year with various clients. You can rightfully ask his curriculum vitae to check if the person chosen is the right one for you.

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Study the fund

Since, there are various funds available in the market; you need to study deep in research over the various options as offered by your fund manager. Various funds have various risks and rewards, and it completely depends on your risk appetite and your goals, on which to adopt. Most of the funds are for mid-term to long term, thus making a proper analysis of funds is suggested before signing for any fund.

Consider Systematic Investment Plan

The best way to any Mutual Funds investing without any doubt is Systematic Investment Plan or SIP. While, you can invest your fund in a lump sum too, the trends have changed more towards the Systematic Investment Plan, in recent years. More like a loan, you need to pay a sum to purchase a certain number of units in your funds, which depends on NAV (Net Asset value). However, while in loan you are clearing your debt; in mutual funds you are building an asset over the time. Remember that with a minimum of Rs.500 per month, you can start your SIP and build your future.

Monitor Regularly

Regularly strictly doesn’t mean daily. You should check on a regular basis your entire funds, which gives you an insight on what needs to sell off and what you should pick. However, while the fund manager manages this whole part, you can just get an insight and learn for your future.

There are various Mutual Funds, depending on the tenure you are interested in opting for! While, some are risky and come up with higher returns, there are many which are very conservative in approach and are not known for aggressive returns.

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If you have a stomach to bear the harsh winds of the volatility of the market, only then you should enter in mutual funds. Most of Mutual Funds have given very good returns over the years and people have built up  a huge corpus for various purposes like child education, child marriage, buying a house, buying  a car and for own retirement, etc.

If you are interested in building your own portfolio and not interested in taking the services of any fund manager, we can come up with an analysis for your good by educating you on various mutual funds you should invest.

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