Mutual Funds Investing: 4 Tips Can Make You Millionaire
Every one of us wants to achieve success and earn a lot of money to lead a luxurious lifestyle. It is very much true that all of us cannot own a company which is as big as TCS or Reliance, but still, it is quite possible to earn a handsome amount for being able to afford a lavish lifestyle.
Mutual funds are a great tool of investing your surplus money particularly in the schemes which suit your investing needs. Read my article to know more about mutual funds.
We all save some money throughout our life to cope with unusual events or to fulfill our future needs. But, small savings instruments (money that is invested at a fixed rate) are not sufficient to accommodate the requirements. The only reason being, these savings do not provide returns on the amount deposited recurring account, postal account or in the bank FDs.
On the other hand investments in the mutual funds, by and large, brings the required money which has been invested in them. Since the inception of mutual funds, it has been very easy to invest money and build wealth. Here are some useful mutual funds investing tips that can help you to multiply your money.
1) Invest via SIP (Systematic Investment Plan)
The popularity of SIPs (Systematic Investment Plans) has gone up in the last few years. SIP is the most preferred investing method which would let you invest your money (starting as low as INR 500) at the regular time (any day of the month) for a stipulated period of time.
Why should you start SIP?
One, it imparts financial discipline to your life.
Two, SIP helps you to invest regularly without tussling with market mood, index level, etc.
Three, systematic investment will give you the cost of an averaging benefit.
Four, let you enjoy the power of compounding. When you invest over a longer period and earn profits on the profits earned by your investment, your money would start compounding. This helps you to build a strong corpus with regular small investments.
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On the flip side, if you invest a lump sum amount, then it might not be possible for you get the benefits of the bullish and bearish market scenario, and you might not be able to get the maximum yields for your investments. Hence, to maintain the sweetness of your investments, invest through monthly SIP in your selected schemes mutual fund scheme.
2) Make Long-Term Financial Goals
Various types of mutual funds exist to cater to different needs of different people. Largely, they are of three types; (1) Equity or Growth Funds, (2) Income or Bond or Fixed Income Funds, and (3) Hybrid Funds. All these schemes are specially designed to attract peoples from each and every segment to actively participate and invest in mutual funds.
The investment in mutual funds also facilitates the clients to invest in short-term schemes, but the return on investment from such a plan is not at par as compared to that of long-term investment. Financial Planners are of the view that “if a person is investing to achieve a short-term goal that needs to be achieved in a couple of years, he/she should invest in debt schemes (because when you have a short-term goal (2 to 3 years), you should not expose your investments to unnecessary risk.
On the other hand, if you have a financial goal that needs to be met after five or 10 years, you can surely bet on equity mutual fund schemes to achieve them. Equity, as an asset class, is considered ideal to meet long term goals because it has the potential to offer far better returns as compared to other asset classes over a long period.
Simply put, it is advisable that individuals must aim for investing over a longer time (10 years and more). The long-term investment will help you to bring out the maximum gains from your investments.
Read this: 7 Mistakes Every Small Investor Often Commits
3) Monitoring The Existing Investments
Though it is said that investment in mutual fund provides returns in the long run, still one should not just invest and forget. Unlike stocks which need regular monitoring, a mutual fund portfolio can be reviewed once in 6 months. Keep in mind that a timely review of the portfolio is required in order to maintain the balance of returns. Know more about how to track the performance of your mutual fund.
There are fund managers who allocate the funds wisely and ensure the returns to the clients. However, it is the responsibility of the clients to carefully spot the difference between the promised and the actual returns because it is your hard-earned money that has been deployed and not anyone else’s.
4) Eliminate The Under-Performers From Portfolio
As mentioned earlier, the clients should review their portfolio at regular intervals and discard the mutual funds which are not productive. It is essential to clean the mutual portfolio at regular intervals as the non-productive schemes will result in wastage.
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Mutual funds can help you to become a millionaire provided that you follow the rules set by your financial planner or any experts. So value the importance of your money and make the maximum use of it.
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Disclaimer: The contents and data presented here are just for your information & personal use only. While much effort is made to provide the information, I (Vishal Dalwadi) or “Finblab” do not guarantee the accuracy, correctness, completeness or reliability of any information or data displayed herein and shall not be held responsible.
