“The best time to plant a tree was 20 years ago. The second best time is now.” Ever heard of this Chinese proverb? It perfectly highlights the importance of time and how we waste it waiting for the ‘perfect time’.
Although the sentence only mentioned planting a tree, this applies to everything you do from starting to work on that prolonged project to investing in mutual funds.
Let’s clear the two major doubts people often have regarding mutual funds – when and how to invest in mutual funds.
When is the best time to invest in mutual funds?
The best time to invest in mutual funds is now! We get it that most investors wait for the market to be at its peak to get the most returns at the start. This strategy might work well when investing in direct shares. But to get more returns from your mutual funds over the tenure the key is to start investing early.
How the mutual funds are different from investing in shares?
That’s because depending on the types of funds you choose the mutual funds to invest your money in shares and other securities. You as an investor hold mutual fund units, which will increase or decrease in value depending on how the mutual fund’s investments perform.
How do you predict the best time to invest in mutual funds?
It’s hard to predict the best time to invest in the equity market. But you can always choose the safer way to invest in mutual funds online through a Systematic Investment Plan (SIP).
Mutual fund houses offer SIP investment through which you can invest a minimum of Rs 500 per month. SIP also gives you the benefit of the power of compounding. So, over time your small investment will help you create wealth without taking unnecessary risks.
What to look for when investing in mutual funds?
- Set your investment goal
Whether it’s a trip abroad, your child’s higher education, or retirement corpus, setting up an investment goal will help you decide the right tenure and investment amount.
- Invest in the right type of fund
It takes more than knowing about types of mutual funds. Choose the type of funds depending on your financial goals and investment appetite. For example, for first-time investors, debt or balanced funds are ideal. However, if you’re looking for tax-saving investment options, go for the tax-saver funds.
- Diversify your portfolio
One of the best things to invest in mutual funds is you can ride the market volatility and balance out the losses by diversifying your portfolio. Choose to invest in more than one mutual fund. So when one fund investment underperforms you have others to make up for the loss.
How to invest in mutual funds?
You can easily invest in mutual funds online in few simple steps.
Step 1: Visit the official website you want to invest in and open the Demat account.
Step 2: Enter the required details.
Step 3: Update your KYC online.
Step 4: Make your first investment.
Now that you have got your major doubts cleared, start your mutual fund investment today.