Mutual Fund

Stick to this secret mantra to make money on mutual fund investments in 2020

Hybrid Funds

Have you ever wondered how people end up making enormous gains when they invest in mutual funds? Everyone wants to make quick money but they also often end up losing their hard-earned money in their quest. Mutual fund investments demand a little discipline towards your finances but yield you higher returns. There are various benefits of mutual funds if you know the secret mantra behind it. According to a monthly report by the Association of Mutual Funds in India (AMFI), average Assets Under Management (AUM {i.e. the total market value of mutual fund investments in India}) was Rs27.26 lakh cr in December 2019. Clearly, one cannot go wrong with mutual fund provided you know the secret mantra.

Here is how you can excel in financial planning for your mutual fund investments:

Before investing, you should know your investment objective. You need to be clear with your financials planning to reap the maximum returns. Also, keep in mind the investment horizon for these goals to be able to choose between equity and debt funds. Equity mutual funds are ideal for long-term investment goals such as creating a corpus for your retirement, higher education for you or your siblings, marriage, etc. One of the mutual fund benefits is that they offer dual advantages – capital appreciation and post-tax returns. However, you should always consider the volatility and risk associated with equity mutual fund investments.

Also Read: Why should millennials start investing in Mutual Funds?

On the other hand, debt funds and bank deposits are ideal for short-term investment goals since they offer less volatility and are suitable for investors with a low-risk appetite. These investment tools are a relatively safer option compared to equity funds. Always check the risk appetite needed for the fund you want to invest in to ensure that it aligns with your risk profile.

If you intend on investing for just a few months, ultra-short-term mutual funds are an ideal choice for you. If you are parking your money only for a few months, you should invest in liquid funds. If you have a moderate risk appetite, you can consider investing your money in a multi-cap mutual fund scheme.

On the contrary, if you are one of those conservative equity investors who detests volatility too much, you should try to stay away from small-cap and mid-cap schemes. Instead, you should park your savings in large-cap mutual funds.

One can always invest in mutual funds online through various platforms available, e.g. Asset Management Company (AMC) websites, mutual fund aggregators/distributors, etc. You can also always avail the services of a seasoned mutual fund expert or mutual fund advisor.

Also Read: Should I Alter My Mutual Fund Portfolio?

These basics can prove to be extremely useful and significant in 2020 for multiple reasons. For starters, the future course of the Indian economy is still uncertain. This means that you should play extremely safe in 2020 when you invest in mutual funds online. Adhering to these basics is a sure-shot way to do so. Happy Investing!

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of Finaacle.com - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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