When you don’t know which way to go to begin investing in Mutual Funds, it’s best to start with Balanced Funds. These will help you get exposure to both Debt and Equity.
2 COUNT THE CHANGE
Whether you know which Funds match your risk and return profile or not, start investing small amounts like 500 or 1,000 every month.
3 INVEST MORE OVER TIME
By starting small, you can take baby steps and adjust your investment plan according to your comfort. This lowers risk.
4 LOW RISK APPETITE
Average risk-takers can invest 500 each in a Debt Fund and an Equity Fund. Lower your risk appetite, higher should be the Debt MF exposure.
5 DIVERSIFY OVER TIME
As you get more comfortable with investing in MFs, slowly increase you exposure to different kinds of Funds over time.
6 ADD EQUITY
Even if you have a low risk appetite, you can add Equity Funds of different kinds for long term goals. Increase slowly to check your risk.
7 TIME PERIOD
Ideally, Equity Funds are best suited for goals over 5-10 years, while Debt Funds are often best for shorter years. You can decide according to your goal.
8 INTEREST RATE CYCLE
Generally, investors flock to Debt Funds when they expect interest rates to fall. During these times, prices rise as the rates fall, thus increasing returns.
After a few months, you can branch out to Liquid Funds and Ultra Short Term Debt Funds to ensure you have liquid cash.
10 GOLD WITH RESERVE CASH
Every time you have any reserve money left, invest it equally between Liquid Funds and Gold Funds/ETFs for a rainy day.
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. While there is no legal definition of the term “mutual fund”, it is most commonly applied to collective investment vehicles that are regulated and sold to the general public on a daily basis.