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Mutual Fund Investment is one of the most preferred investment options for one’s wealth generation by Financial Experts, but for investing in mutual funds, an investor does not only need money, but an amount of patience, and a perfect investment strategy.
In mutual funds, the perfect investment strategy includes two, basic activities, first Masterly Inactivity and second Waiting Watchful, that help you to move on the path, towards successive investment. Let us understand these.
We all know market performance is not consistent, and so is mutual fund performance not consistent. Mutual fund performance, do fluctuate, with the fluctuation in the market’s performance, but this is not a problem, the actual problem arises when investors, get afraid when their fund performs low, and get overloaded with the pressure of losing their money.
The ultimate result of this pressure is, investors, sell their fund in the bear market condition, and either faces a loss or low return, basically, their investment objective remains incomplete.
Losing patience, while investing in the market, leads the investor towards loss in their investment. To avoid this, it is always advisable to investors, at the time you plan your investment, do plan your risk tolerance, do get aware of market fluctuations, and its consequences. In investment, it is said, waiting and holding is an art, that should be done wisely, in order to generate good returns on your investment.
Investing is basically, 10% buying, 10% selling, and 80%, waiting, the waiting period in your investment, determine your returns and capital appreciation. This statement clearly states, when you buy or invest in a mutual fund, get yourself prepared to resist the market fluctuations. Understand the following investment strategies:
- Masterly Inactivity: Mutual fund experts advise, when you invest in a mutual fund, do invest in Regular plan instead of Direct plan in mutual funds. Opting regular plan, will help you manage and regulate your investment by expert and experienced fund managers, thus you can relax after you invest in mutual funds, you need not an active check of your investment on daily basis. When you invest in mutual funds, you need not to time the market performance, invest and relax, give an appropriate time, for your investment to grow, go for long-term investment, don’t panic when it gives negative returns, wait for the market to rise, and then see how your investment grows positively.
- Waiting Watchful: As I said earlier, in a mutual fund, waiting is an art, that helps to generate good returns on your investment, but your waiting should be planned wisely. In mutual funds, waiting doesn’t mean, invest and forget, rather it means that invest, and relax, but do not relax completely. Relax in the way, like don’t try to time the market on daily basis, it may depress you, rather check your funds’ performance monthly or maybe annually, this will help you know its performance trend, and you can decide whether it is good to stay invested in the same fund, or you need to switch to funds performing better than previous one.
- Redeem your fund, when you need it: Redemption of funds is often confusing to investors. It is always advisable, redeem your fund, when you actually need it, not when your investment is giving good positive returns or negative returns. Also, if you are investing through SIP (Systematic Investment Plan), don’t stop your SIP plan, at the time of recession, continue it, as rupee cost averaging will help you to time the market, and will also ensure, buying more units when the market is low, and fewer units when the market is high.
- Seek Professional Advice: Well, this is the most important strategy for one’s perfect investment plan, do consult a financial advisor or financial planner before investing in mutual funds. A financial planner or advisor helps you select the best fund, for your investments as per your requirement, and risk profile.
As of now, you are aware of the strategies, that help to make your investment experience better and generate good returns, so plan your investment in mutual funds, and do follow the above-mentioned strategies.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).