10 Secrets for Successful Mutual Fund Investing

10 Secrets for Successful Mutual Fund Investing

Amid the decisive economic restart and the sharp recovery in the market, many mutual funds beheld a massive performance improvement. Corporate investments in mutual funds increased by 27% within one year, from April 2020 to February 2021, taking corporate investments to a three-year high. With a slash in interest rates by RBI, most corporates parked their money in liquid funds, predominantly debt, hybrid, and focused funds biased portfolios.

What is your take – is speculation an issue or arrangement? Who does your speculation make rich – you or the broker for example the shared asset, dealer, merchant, rating organization, organization advertiser and so forth? How would you choose a MF plot – on your insight, experience or judgment or in light of some proposal or tip by a purported reserve master or market master? Have you at any point lost cash in outright terms for example whole or a piece of your capital? Have you at any point lost cash in relative terms for example your speculations acquiring positive returns however significantly less than the other elective ventures? Have you had the option to separate among great and awful common asset plans? Do you know the genuine undercover of long haul abundance creation? Assuming not, read on to open the genuine mysteries of common asset contributing.

Here are the unfolded secrets for successful fund investing:

Avoid selecting funds solely based on their past returns. However, past returns are important but do not indicate good future returns. You should consider it, but your investment should not be based on this only. You should focus on long-term regular returns rather than short-term high returns to shortlist a mutual fund.

1. Learn to ignore short-term fluctuations. Mutual fund value can go down. No investment can have only an uptrend. Stay invested for longer durations. And review your portfolio every six months. Do proper research for the right move before exit.

2. Returns come before the expense ratio. Like many investors, you may consider the expense ratio a parameter to select a mutual fund. An informed investor does not give up on a fund just because of the expense ratio.

3. Avoid timing the market. Even legends do not try timing the market. You can opt for SIPs for your mutual fund investment to address the issue. It will help average out your cost and risk.

4. Do not fall for lower NAV. It is not always good. Net Asset Value (NAV) doesn’t indicate the growth of a mutual fund. Lower NAV does not mean that it gives good returns. Your investment should be based on important factors like steady past returns, Assets Under Management, peer observations, fund manager, etc.

5. Aim to step up your investments every year. A slight increase in your investment can increase returns significantly. Whenever you get an increment on your salary, justify your investments as well.

6. Liquid mutual funds are a good substitute for saving accounts. You can hold your cash in liquid funds for 3 – 90 days. You should have minimum cash in your savings account as the interest rate is very low in banks. With liquid mutual funds, you can earn up to 7% returns.

7. Tax saving with ELSS funds. ELSS funds are considered best in tax-saving instrument categories under Section 80C. You can invest for the lowest lock-in period of 3 years and a boost in returns.

8. Invest in funds that suit you the most. Mutual Funds are not limited to risk-takers or long-term investors. Every type of investor can choose from a wide range of funds. You can explore all the categories to build a well-suited portfolio for your profile. Whether your

  • risk appetite is high, medium, or low,
  • investment horizon is long, medium, short, or ultra short term,
  • or better understanding is in the industry of Pharma, IT, Real Estate, or any other

You can find a mutual fund as per your suitability to the market.

9. Due diligence for fund houses. You should check if a mutual fund is regulated and monitored by SEBI. Do not fall for big names only. You can find good opportunities with small registered fund houses also.

Thus, you need to focus on important parameters and your investing requirements while shortlisting mutual funds for investments.

Acuity Knowledge Partners – leading in investment insights, can help investment banks and advisory firms globally, providing research and analytics for markets and financial instruments. The team has partnered with several fund commentary, investment commentary, and thoughtful leaders.

%d bloggers like this: