A mutual fund is one of the preferred products to invest in the equity market for the possibility to earn substantial returns. Invest in mutual funds for probability of better returns from equity market. But mere investing in mutual funds does not really guarantee higher returns and the creation of wealth.
As an investor, you need to keep in mind a few things that significantly affect the outcome of your investments in mutual funds. These are in no way less important than understanding the factors affecting the equity market from time to time.
But investors had been ignoring these basic and important factors that are in his control and focusing more on market trends and market news.
That is why it has been observed that both globally and in India, investor returns in their equity portfolio are less than the returns generated by the equity market. That means though the market (Nifty / Sensex say) might have generated a good return in a period the investor could not generate the same return.
Have the right mindset, understand the instrument.
You as an investor are at risk of not gaining from your mutual fund investments either out of greed or out of fear both of which come due to a lack of understanding of the instrument.
Ups and downs are a part and parcel of equity markets, understand the nature of the product, do not panic, and invest responsibly.
Invest responsibly, start with a goal.
When it comes to investing in a mutual fund, it is of utmost importance to start your investments keeping in mind a goal. As investments in equity mutual funds have easy exit policies there are high chances that you might withdraw or stop your investment at the first opportunity or need.
That is why it is not surprising that the average life of a SIP started is around 2-3 years although the investor starts the investment by seeing a projection of 15 to 20 years. If there is a goal for an investment the investor continues with it till it is achieved. When it is about investing in an equity mutual fund, always think long-term.
Think long term, stay invested.
There exist a number of investment products for you as an investor with different characteristics and suitable for different purposes. Equity mutual fund by nature is an instrument for long-term investment. Long-term here means more than 10 years.
To reduce the market risk as well as to gain the true benefit of compounding from your investments in equity mutual funds, you as an investor need to stay invested for a longer term and stop making hasty decisions by following market trends.
Stop following market trends, get in touch with an advisor.
Stop following the news channels and media when it is about investing in equity, it will lead you nowhere. Also, I hope you understand, and it is not hard to believe that the celebrities who appear on TV and other media and offer investment and insurance ideas to the mass do not invest their own money without the advice of an advisor.
Get in touch with a responsible advisor or distributor of mutual funds who can understand your specific expectations from an investment and guide you through the journey and prepare you for uncertainties.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute professional advice. While full efforts have been made to ensure the accuracy of data and numbers, no responsibility is taken for any errors or omissions. Tax implications on insurance, investments and returns from related products may change due to updates in tax laws. Always consult with your financial advisor or insurance expert before making any investment or insurance decisions. The author is not responsible for any financial losses or damages incurred as a result of relying on the information in this blog.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax, and financial implications of the investment/participation in the scheme.
