InvestorQ : I am new to the world of investing. What are the tips a mutual fund beginner should keep in mind?
Rohan Bhadani made post

I am new to the world of investing. What are the tips a mutual fund beginner should keep in mind?

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Shriyansh answered.
2 years ago


As mutual funds become a preferred vehicle to reach financial goals, many investors are putting money in them for the first time. Here is a short guide to what first-time investors should do to invest in mutual funds and how they should select right schemes.


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Tarun Madaan answered.
2 years ago


Welcome to the world of investing, Rohan. This is going to be a fruitful journey for you!

Mutual funds are one of the best option for investors to invest their money and create long-term wealth. It is also one of the safest investment option in the otherwise volatile equity market. However, choosing the best mutual fund can be a daunting task for any mutual fund beginner. So, here are a few tips that can help you get familiarized with mutual funds.

Decide your investment portfolio
How much you want to invest in which mutual fund is an important decision to be made. One needs to make the proper asset allocation for mutual funds to work in your favour. Your age, financial dependents, occupation, etc are a few of the determining factors. But a rule of thumb that needs to be followed is that you should invest the same percentage in debt funds as is your age. This means, if you are 35 years old, then only 35% of your investment should be in debt funds.

Select the right funds

Choosing the right fund will depend on various factors such as:

  • Your financial goal: Is your goal to buy a new home, invest in your child’s education, securing funds for your retirement or just an addition to current income?
  • Time-frame: How soon do you need your money back? Depending on the time frame you are comfortable with, you can invest in various mutual funds.
  • Risk-bearing capacity: How much amount of risk can you stomach? This is a very personal answer and there’s no correct answer to this question. Park funds in debt funds if you want to play safe, but feel free to invest in small and mid-caps if you believe in no risk, no gain. And if a balance is what you are looking for, hybrid funds should be your answer as they offer a balance between returns and risks.

Lump sum or SIP   Systematic investment plan, or SIP, is the best way for a beginner to start the journey of investments, for it comes with an inherent disciplined approach. In an SIP, you give the bank a mandate to transfer a predefined amount in to the asset management company, which will then credit mutual fund units to your account.

 

However, SIP is not the only way to invest in the market. Say you have some lumpsum amount lying idle in your account, and you don’t have any major expense coming up, you could invest the amount in to a mutual fund of your choice. And if you invest on a day when the market is not performing particularly well, you also stand to gain more units of the mutual fund.  
 
Monitor your portfolio

Once you have invested your money in any mutual fund, it is of utmost importance that you monitor your portfolio and the gains/losses you are making, for only then can you take steps to minimise your losses or optimise your gains.

 

Additionally, you must also be aware of how the market is performing and what key trends are emerging. This can help you spot opportunities to create further wealth.

 


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zaheer bharde answered.
2 years ago


Volatility and uncertainty are part and parcel of equity investing. Equity mutual fund (EMF) investors too cannot remain unscathed when the movement of indices becomes range-bound. In times like these the performance of indices as well as mutual funds (MF) takes a beating. The Sensex's 1-3-5 year returns have been negative 6.55 percent, 9.88 percent and 5.82 percent, respectively. Investors can use this as an opportunity to review and build a robust EMF portfolio. After all, if an inves .. 

The MF scheme's performance, however, should be monitored on a regular basis. Reviewing of an EMF portfolio could entail scanning the schemes in the portfolio, including various diversified schemes, thematic or sector funds and even the large, mid, and small cap funds. Here's how and what it takes to review a fund's performance. 


user profile image
zaheer bharde answered.
2 years ago


Volatility and uncertainty are part and parcel of equity investing. Equity mutual fund (EMF) investors too cannot remain unscathed when the movement of indices becomes range-bound. In times like these the performance of indices as well as mutual funds (MF) takes a beating. The Sensex's 1-3-5 year returns have been negative 6.55 percent, 9.88 percent and 5.82 percent, respectively. Investors can use this as an opportunity to review and build a robust EMF portfolio. After all, if an inves ..