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When to invest in Mutual Funds?

Is it Good to invest in a mutual fund?

Well most of us have obvious mind set of investing in instruments which guarantees fixed returns and capital invested too is protected, thats why still FD (Fixed Deposits) and RD (Recurring Deposits) are most popular saving instruments in India.

Mutual Funds right now do not bear such trust because of constant ups and downs in market where mutual funds invest.

SEBI is the regulatory body regulating and supervising the Mutual fund industry that give license to Mutual funds after proper due diligence. So, the risk of Mutual fund fled are NIL.

Pupose of Investment in Mutual fund

  • Higher Returns
  • Extensive Market Exposure
  • Professional management of Fund.
  • Tax efficient Investment.
  • Less tax on Profit.
  • Benefit from Power of Compounding.
  • Superior returns in Long term than traditional investment.
  • Safeguard from short term fluctuations.

Right time to invest in a Mutual Fund

Are you thinking of right time to invest in Mutual Fund. Most of us have question in mind about the right time to invest in Mutual Funds or ELSS

  1. When markets are falling
  2. When markets are gaining
  3. When there is a slump in real estate
  4. When you have excess money

These questions regarding investment are obvious but there is nothing so called good time or bad time to invest when you have long term investment goals in your mind.

One can start investment with as low as Rs. 500/- through SIP but there are several factors to be kept in mind before investing.

Factors to check before investment in Mutual Fund

  • Risk Profile

Check your risk profile whether you have large appetite to bear risk or you are a conservative investor with low risk appetite. If you need risk free returns then you can go for debt funds or Glitz fund having lesser risk.

  • Market Trend

Conservative investors may use a 10-15% correction in market as s right time to invest in market while a aggressive investor may take the lead to jump even when market is at high.

  • Expected Return

High return seeker investors may invest in equity oriented mutual funds and use the SIP option for buying mutual fund on monthly basis. They can select mutual funds which have given higher return for last more than 5 years.

  • Investment goal

Investors having long term investment Goals should choose Hybrid fund with a mix of Equity and Debt to have higher returns in longer period while investors investing for short terms goals may opt for Equity funds that may generate higher returns in Short and Medium term.

“May be a retired person is looking to earn a regular income while a salaried one wishes to save some amount every month.”

  • Mutual Fund Tax Benefit u/s 80C

ELSS (Equity linked saving scheme) offers tax benefits as they are eligible for deduction u/s 80C. They comes with both options to invest through SIP/lump sum payments.

Read more : ELSS

  • Long/Short term Goals

As per general theory investments with long term view showing some patience ends with high returns while with short term objective can get some quick returns but not as high as with long term ones.

Note: Mutual fund investments are subject to market risks.

Read more important Topics before Investment Decision:

Capital Gain types and calculation of mutual funds

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