Last Updated on October 10, 2021 by Shiv Nath Hari
invest in mutual funds: The biggest mistake new investors of mutual funds make in investing by looking at the past returns of the fund. By looking at the past returns, it is difficult to predict how the fund will perform in the future.
How to Invest in mutual funds : Investing in mutual funds demands patience and a better understanding of risk. If you are going to invest in mutual funds for the first time, then it is very important to understand some things. However, considering the plethora of investment options in mutual funds and the current market conditions, choosing the right fund is not easy. Still, if you keep in mind some basic precautions related to investing in mutual funds, then you will not incur losses.
Past returns do not guarantee better results
The biggest mistake new investors of mutual funds make in investing by looking at the past returns of the fund. Going by the past returns, it is difficult to predict how the fund will perform going forward. Apart from this, entry in the market at the right time is also an important aspect. Experts believe that if the investor has prior experience of the market, then he stays in mutual funds for a long time.
Invest with a portfolio of established companies
It is important for new investors to invest in the funds of established companies initially. Take a look at their portfolio and then take an investment decision. Gradually increase investment in mutual funds. The best way to do this is to invest through SIP. In whatever condition the market is, investing through Systematic Investment Plan ie SIP is the best way.
Strategy of new investors in the current situation of the stock market
The stock market is at an all-time high. In such a situation, new investors of mutual funds should invest in index or large cap mutual funds. They should avoid investing in mid-caps and small caps as they are badly affected by market volatility. If an investor wants to invest 10 thousand rupees in mutual funds through SIP in today’s date, then he has to choose an index fund, a flexi cap fund and a value fund. So that they can get the benefit of diversification.
Tax on PF Contributions: Tax calculation will be done on the money deposited in PF, know whether it can affect you too?
Investing in Mutual Funds is Right for Long Term
Investing in mutual funds proves beneficial in the short term but not in the long term. Seven to ten years time has to be given for correct returns. Most investments expect better returns within a year. But looking at the returns of such a short duration, it is not right to make an investment strategy in mutual funds.
Investing in Balanced Advantage Funds can be beneficial
According to experts, Balanced Advantage Fund can be the right strategy for new investors. Balanced Advantage Fund is also known as Dynamic Asset Allocation Fund. In this, 30 to 80 percent equity allocation is done depending on the market condition. Even if a new investor is planning a long-term investment, he is advised to invest in Balanced Advantage Fund only.