Mutual funds investing is a sketchy subject for many.
The risk factor keeps most interested investors at bay. But more than that what keeps them away is gross confusion about terminology and processes of how Mutual funds work.
Most people feel that there is a specific winning formula, following which they can make millions through mutual fund investments. But we would like to assure you that no such clear-cut formula for victory exists when it comes to investing mutual funds.
All it needs is an open eye and in-depth research with a good understanding of financial markets and factors that can impact the economy. This may seem like a lot to take in but is in fact otherwise.
Here are a few points about mutual funds that you should know
Mutual funds investment for retirement
After retirement, the primary concern of most people is a regular cash flow generation along with capital preservation. Several debt funds have a medium amount of risk pattern and are ideal for 5-6 years of time horizon of investment. Some funds like HDFC High-Interest fund, Birla Sun life Short-term opportunities funds, and dynamic fund are a few pure debt funds with no equity exposure in their portfolio. A few more equities exposed aggressive funds are Tata Balanced fund, SBI Magnum Balanced fund etc. which have offered with 65 percent or higher exposure in equity to offer a growth of 35 percent or less in Debt instruments to provide protection.
Mutual funds investment for students
For young learners and students, one must understand that before determining the type of investment they must ascertain the time limit for which they will remain invested. As a young learner or a student one may choose to aggressively invest in equity. Making sure that your financial goals are at least 7 to 8 years away. In order to earn best returns, one can consider investing in mid-cap or multi-cap funds. These funds have high risks but are capable of delivering better performance with time. Some good options out there presently are – HDFC midcap opportunities, Franklin India prima, Mirae emerging bluechip fund etc. For long-term investments, one can consider investing in these funds through SIPs. For instance, BSL Frontline equity, ICICI Prudential Focussed Blue Chip are large-cap funds.
Parameters to ascertain the quality of mutual funds investing
There are several parameters to ascertain the quality of a mutual fund and rating is one of them. There are few other factors to judge the quality of mutual funds. Such as AUM, Adherence to investment strategy by the fund manager, volatility vs. performance, fund manager tenure and more. For investing in such funds one must one must first evaluate these parameters.
There were a few most common questions about mutual funds investments. We recommend that you indulge yourself in thorough research before making investments.