We all know how important investments are in our lives. Properlong-term planning that paves the way to getting the right platform for investment is the need of the hour. This planning can only take place when one has an adequate knowledge of what to invest in and how much to invest. There are immense avenues which are available in the market today. The best option that can always prove to be fruitful is an investment in mutual funds. For people who are regular on investments but do not know much about the investment options available, mutual funds can all always prove to be the best bet.One needs to have a plan in mind; rest can always be taken care of.
How to get the investment going
First and foremost thing that comes in our mind before an investment is how we go ahead with investment in this tool. Well it can be done either
- Directly or
- Through a fund manager
In the majority of cases, the investment in mutual funds happens through an advisor, who helps guide the investor on the best fund that would suit his or her need. In the case of direct investment, the investor is well aware of the characteristics of the fund and the returns that are expected out of them. This type of investment happens mostly online through the website or at the branch where one needs to take along the relevant documents. The best part of going through this option is that one can save a significant amount of commission that goes to the advisor or fund manager. But all the documents need to be taken care of by the investor himself as there is nobody else who would provide that solution.
In our country, investments are regulated by The Securities and Exchange Board of India which keeps a check on the policies and their framework. So if you are planning to invest in the best mutual funds in India, you know the plans and policies where you need to invest keeping in mind the policy term and returns that are expected.
Mutual Funds and its types
There are different types of mutual funds that are available in India. This are-
- Equity Mutual Funds
- Debt Mutual Funds
- Hybrid Mutual Funds
- Solution Oriented Mutual Funds
Taking into consideration the tenure, amount and objective, one can invest in either of the above Mutual Funds. Identifying the best option is the key,and it all boils to past experiences, the track record of the fund and the reason behind the investment.
Equity Mutual Funds schemes invest directly in stocks. So if the investor is looking out to get high returns and in the process of doing so has an appetite of taking risks as well, equity funds are the right option to go for. It is well to be noted that this investment can be a bit risky in the short-term and it is always advisable to hold the investment rather than going for quick closure. Equity funds further have ten types of schemes and hence offer a range of plans to choose from.
Debt Mutual Fund Schemes are the ones to go for. These are the funds that are mostly taken with a short-term goal,i.e., below five years. They are safer compared to equity schemes,but their returns are not as high. They are almost 16 sub-schemes under debt mutual funds.
Hybrid Mutual Funds are the schemes that have a mix of equity as well as debt. When investors are looking out for moderate risk and not so high returns, this scheme can be the one to be a part of. This scheme is further categorized into six types.
Solution Oriented Mutual funds are the ones that are targeted keeping in mind certain goals like education, retirement,etc. Most of these schemes have a mandatory lock-in period of 5 years.
Ensure the reason for investment
One should be very careful while looking out for the best mutual fund investment. The clarity has to be there in the first place where the reason to invest needs to be jotted down. Unless that happens, you might end up investing in something which would not be worth. The systematic investment plans are one of the best options to look into as they offer returns on a comparatively lesser investment. These investments have indeed become quite popular,and most of the private insurance companies have loads of schemes that are doing pretty good. It is hence very important to invest in the right option by financial goals. This goal-based investment always ends up paying higher returns over a period. If one has a high-risk profile, it is always advisable to invest into midcap and small-cap schemes. This would definitely curtail the risk and ensure guaranteed profitable returns. In case one wants to diversify and reduce the overall risk, multi-cap schemes can also be looked into but ensure that these schemes are in line with your objective of investment.
Markets uncertainty should always be looked into
To be fair to the investor, the stock markets have become pretty volatile. One would never know the implication of a decision or step taken aboutmutual fund investment. So it becomes imperative to invest in a consistent scheme that is safe and can be banked upon in the long run. Today, one has to look into several objectives before investing in the right mutual fund. Be it the kid’s education, marriage, retirement, house loan, everything has to be taken into account before taking that right decision on where to invest. Mutual Funds have become very popular because of the attractive returns that they offer for a lesser per month investment. All it takes is a proper study into the company offering it and the fact that the premium does not drill a big hole in your pockets. The procedure for enrollment in any such financial investments tool has also become seamless. Most of the banks and financial institutions recommend mutual funds because of the nature of returns associated with them.
One can always make changes in the existing mutual fund’s portfolio. It mainly takes place due to the changing market scenario or even with a change in priorities. Be it any mutual fund in the portfolio; one should look out for at least 5-6 years. The actual expected returns can only be gauged post that period. Besides, it won’t make any sense if one stops investing in a SIP before that period.
Hold them; they will fetch you returns
India has seen it all. In the last decade, the financial investment tools have increased and taken shape. All thanks to the microfinance institutions that have come up and offered a range of diverse schemes to choose from. Having said that, investors need to be very careful on the range of investments they plan to make. Most of the people would suggest investing in equity-based mutual funds as they provide higher returns. We all look forward to having more from the present and ensure that we have a great tomorrow as well. But investment in equities comes at a cost where the markets might not be the same in future. So the investor has to be prepared for the adverse situations as well. You might have got great returns in the past, but expecting the same in future too is always uncalled for. At times, some people quit equities only because they start comparing returns. The fact remains that the markets shall always change. One has to stay level-headed and committed. If someone stays invested for the nextten years, the chances are that the patience will be paid off. Another point an investor should always look into is to seek advice. This becomes very imperative in case of mutual fund investment as it not only provides information on the market and other stocks but also lets him diversify and probably change the existing scheme to something else.
Always keep the math up to date as it not only helps you be aware of your present status but also keeps you informed about the future as well. Speculating during a particular time may or may not fetch returns that you are looking out for but will ensure that you are well aware of what you hold. One of the most important things to keep in mind is to hold the investment during tough market situations. Nobody can predict what’s in store for future but at the end of the day what really would matter is not pulling out of a particular investment in advance. One should wait for the right time to quit a mutual fund investment because ultimately it is all about showing that faith in your investment acumen and the market as well. If there has been a fall, the rise is bound to take place. It’s just a matter of the risk appetite of an individual.
(Author Bio: Digvijay Singh Kanwar is a professional content writer and digital marketing expert and he loves to write about finance and tech-based articles. You can contact him on firstname.lastname@example.org)