Mutual Fund Investment: What should be your MF Strategy for 2019-20?
Mutual funds are gaining popularity as one of the best investing tools. Many new investors are investing in the mutual fund due to recent growth in the mutual fund industry. The Indian mutual fund industry grew 12.5% on an average in the last ten years. Getting the best returns out of mutual funds is not a matter of buying and selling of best funds. It needs planning, proper strategy as well as execution. Some investor loses their money in case if they lack proper strategy and a clear objective. Instead of looking for top performing mutual funds, the investor can plan a proper strategy to maximize their returns and reduce their risk. Last year, we saw most of the mutual funds in the red zone. So, while planning your MF strategy for 2019-20 here are key factors to keep in mind:
- Balanced Portfolio:
Mutual fund advisor always advises an investor to make a balanced portfolio. It helps the investor to stay claim in a volatile or uncertain period. A smart investor understands that volatility can be his friend if he invests with discipline. The diversification of portfolio proves to be a key in making a balanced portfolio. A balanced portfolio contains a mix of the product containing debt, equity and another asset classes.
- Keep investing in SIP:
One of the simplest ways to invest in mutual funds is through SIP. It doesn’t require you to invest a large amount in one go. But always remember to invest in a small amount and increase it later with an increase in risk appetite. For the new investor, it’s one of the simplest ways to enter the market. In case, even you face adverse situations in the future, keep investing in the SIP as it will help in creating long term wealth.
- Choose Fund with a proven track record.
For an early investor in the mutual fund industry, selecting the right fund could be tough. Just checking the past year returns could not be a criterion to select a fund. It’s better to give an overall check such as fund performance consistency, fund manager’s track record, expense ratio as well as fund P/E ratio. Assess the growth record based on the tenure you want to invest for.
- Tax saving with wealth creation:
A mutual fund is one of the best ways of generating and preserving wealth. There are various tax saving mutual funds which help the investor to protect their wealth. ELSS is one such tax saving scheme which can allow you to claim exemption up to Rs. 1,50,000 for any kind of ELSS investment
- Sell When you met your goals:
An investor needs to identify the goal which he needs to invest and the time in which he will reach. So, once you reach your desired goals, start selling. Your strategy for selling should not be confused with anything. Sell it once you meet your goal and it’s vital not to panic in situations like temporary market corrections. The Long-term capital tax solely depends upon how much you sell and how much you gain. So, it’s better to balance your selling.
Disclaimer: Mutual fund Investments are subject to market risks. Please read the scheme documents carefully before investing.