With each passing day, investing in mutual funds appears to be one of the easiest and most hassle-free financial instruments to invest in. As popularly believed, mutual funds offer the most consistent and risk-adjusted returns being among many other investment tools.
Thanks to TV Ads, news, journals, articles, websites and social media campaigns because of which mutual funds have gained such immense name and fame. However, the reality is way harder than how it is usually projected in various forms of advertisements. So, here we are going to share a few essential tips that will help you to enhance your portfolio and maximise returns in the long run.
How To Maximise Returns from Mutual Funds
Invest for 5 years or more
Long-term planning is much recommended for the mutual fund investment. The ideal duration is five to ten years or longer as it allows a portfolio to compound and likely to give a higher return. However, this would only be possible if you could gloss over the market volatility and could self-restraint from selling the fund even if it hits a decline in value.
Go for more
Invest in more than one mutual fund because if one goes through a decline then the other will act as a savior, especially during the time of emergency. In fact, investing in multiple types of mutual funds is more favorable than one particular type. This is to add more diversification to the portfolio and generate higher returns. In addition, you can also reinvest the dividends and interests earned from other stocks and bonds into your mutual fund portfolio to make a greater profit.
Do your own part of research
Even if you have hired a professional mutual fund manager for managing your portfolio, never stop doing your own research work. Read journals, news, and articles or attend mutual fund seminars to gather as much knowledge as possible. Also, keep a watch on the current market move as it will help you to take a wise, calculative and up-to-date decision.
Invest based on financial goal and risk-appetite
There are various kinds of funds available in the market such as large-cap funds, mid-cap funds, and small-cap funds. While large-cap funds are the funds that invest in large companies with huge market capitalization, mid-cap and small-cap funds refer to the funds that invest in companies with market capitalization of $1 to $8 billion or below $1 billion respectively. So, given the fact that the nature of these funds is different from each other and involves different types of risks, you must acquire enough knowledge about them, evaluate your own financial goal and determine risk-appetite before taking a plunge in it.
Use STP for lump sum mutual fund investment
If you wish to invest a lump sum in mutual funds, do it through short-term debt funds or do STP (Systematic Transfer Plan) to equity funds at a regular interval. This is nothing but you are investing in equity fund from debt fund through Systematic Investment Plan, thereby reducing the risk involved in lump sum investment in mutual funds.
So, to conclude, these are some of the essential tips that will not only help you to maximise your income from mutual funds but will also help to choose the best mutual funds in India.
Being a premium brokerage house, Narnolia Securities Limited is committed to generating a consistent, risk-adjusted return for the investors and therefore, offers handy tips, tricks, and advice on how to make a smart investment and maximize the returns. Whether for equity investment or for finding the Best Mutual Funds in India, Narnolia is a powerhouse of the expert solution.
Sure mutual funds are a great investment tool to generate returns, provided you have an ideal mutual fund portfolio.