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How to Upgrade Your Mutual Funds Investment Remarkably

Updated on May 25, 2020
PrateekJain24 profile image

Prateek is a qualified Depository Operation Officer certified by National Institute of Securities Market.

Preface

Mutual fund investments are viewed as a good source of income. There exist numerous funds for investors to make investments. In Mutual funds investment are made in a diversified group of securities such as stocks, bonds, debt funds and other similar avenues. Though investment in funds leads to return there always exists some amount of risk. Investors should develop a mindset which accepts all the market swings. They should try to convert market unevenness into opportunity. Below are some tips that will help out to adapt the right mindset to become a successful investor. An investor should not get disheartened and scare with any opposite swing in the market. Always proceed with a plan while investing. As planning is regarded as a crucial factor in the securities market.

Features of Mutual Funds
Features of Mutual Funds

1. Know Your Basics

It is vital to know the exact purpose to choose a specific mutual fund scheme. Hence, firstly identify your financial needs. Next, decide the time within which financial needs are to be fulfilled. Yet, carry out a risk review process to measure the level of risk involved. Financial needs and goals should be in sync with the amount to be invested for a given cycle of time and with the returns out of it. These are the prime facts needed to figure out before investing.

2. Never Avoid The Thumb Rule

After analysing financial goals classify them into long term goals and short term goals. The goals to be achieved in three to four years are categorized under short term goals. To meet short term goals, investment in bank deposit and debt mutual funds are the saver options. Long term goals are categorised under a five to seven years cycle. Equity mutual fund schemes are the option to make an investment in long term funds. Any deviations or stupor of the thumb rule may lead to an adverse impact on your investment. So, once the goals are set, choose the appropriate funds to make an investment in order to meet short term or long term goal.

3 Take Bearable Risk

The basic approach to do investment for the short term and long term period is suitable in a debt fund and equity fund respectively. The stupor of this rule may result in a huge loss in any diversified portfolio. It is clearly a bad choice to invest in high-risk instrument to meet short term financial goals. As investment in a high-risk instrument for a short period may result in loss. Also, recovery from such a loss is not as easy as pie. Since the investment for a shorter cycle cannot be made in equity schemes due to its dynamic and unknown feature. Thus, equity schemes are worthwhile for long term investment only.

4. Don't Ignore The Identified Risk

When the investment starts losing its value due to the rough patch and downside market slope then the real level of threat arises. Investors who hold their position even in the adverse market state are viewed as prudent investors. Hence, it is really crucial to make a choice of debt or equity scheme for the short term or long term cycle after assessing the risk involved. The market does not move in a single trend. Hence, plans should be timely revised as per the market demand.

5. Study Past Statistical Data

Once the scheme is selected analyse its yearly statistical data. Do not make any choice fund from the weekly or monthly top-performing list. It is necessary to know that handling the funds in both bull and bearish markets are equally vital. Hence, check out a scheme that has delivered the returns to investors in both contexts. Look for the opportunity to earn high returns through investments in funds with mixed securities in their pond. Also, under the worth and efficiency of the fund manager and fund house before investing.

Verdict

Every investor should design and implement a good investment plan. Do market research properly before investing. Make an investment through advisor guidance only. Search for some reputed agency and share your plan with the agent. Discuss all the factor of investment before making any investment. Analyse and focus on risk level as well as return on investment wisely. Never underrate the power of planning. As planning before execution is a sign of success. In case you would like to add something, feel free to share your thoughts in the comment box.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Prateek Jain

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    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      5 weeks ago from Madhya Pradesh, India

      Thank you Simran for your consistent support and encouragement. I am really thankful to you for sharing your valuable thoughts on this. I hope you found this article interesting. Stay connected and keep reading for more valuable information. Thank you once again.

    • profile image

      Simran Malhohotra 

      6 weeks ago

      Hi, Prateek just read your another interesting and knowledgable article. Thanks for sharing excellent tips to invest smartly and safely in mutual funds. Mutuals Funds though provide high returns but are risker in critical market conditions. Every investor should carefully understand all terms and policies before making investment. All tips shared by you will surely help investors to smartly plan their investment before investing.

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