September 22, 2023

Smart Tips to Invest in Mutual Funds

Mutual fund

Over the years, Mutual Funds have grown to become a household name in investments. A Mutual Fund, as the name says it all , collects funds from investors having similar financial aims and invests them in a portfolio of assets having a clear and defined investment goal. With hundreds of different types of Mutual Fund Schemes and numerous types of mutual fund schemes in India, a new investor might find the process a little tough and overwhelming. 

Of course, you can always talk to good mutual fund companies and take their guidance. However, this post is going to get you some tips to do well. After all, you should not miss out on mutual funds as they can really help you financially. Mutual funds offer proper investment opportunities that no type of investor should miss out on.

But the grounds for investing in mutual funds demand some sort of strict adherence to the fundamentals , research to select a fund that fulfils your investment goal, construct a trustworthy, well-planned portfolio and glue to it. 

Income : Spending  equals Savings approach

You must not skip to maintain the fine balance between your overall income and savings ratio. It is crucial for you to track and budget your finances meticulously.  It is going to play a main role in your journey of mutual funds. The more you are prudent about this aspect during your investing, the better you can experience.

The top-secret stays in diversification 

You must build a well-diversified portfolio having an appropriate mix of equity as well as even debt to get the finest of safe returns as well as high returns. For instance, in case you invest in hybrid funds that are somewhat equity-oriented, you may relish a balanced exposure to both segments.

Actually such a thing helps create a hedge against overall volatility. You also get to earn superior returns by investing in diverse assets.  For example, in case you wish to invest Rs 6,000 in mutual funds for nearly five years and have a conservative risk profile then you may distribute your portfolio into something such as:

  • Debt mutual fund Rs 3000
  • Large-cap equity mutual fund Rs 1,500
  • Multi-cap equity mutual fund Rs 1,000
  • Gold mutual fund Rs 500

Remember, it is just an example to get you a quick idea and it is not an advice.  Remember, on the basis of your understanding and knowledge; you can diversify. Of course, if you are taking assistance of a mutual fund expert company, you can take their guidance for sure. Diversify is surely going to help you with your smart investments.

Once you split your investment across diverse asset classes, you do get to participate in the growth of all types of asset classes. Diversification helps you in reducing risk. It even lessons that you do not miss out on gains of any sort of asset class.

Don’t invest based on somebody else’s plan! 

It is not at all advisable to adopt someone else’s investment plan or strategy, no matter how great , as is – it might spell disaster! Before taking the foremost step towards investing it is crucial to define what your investment goals are – it might be retirement, securing your health, securing the education of your child or even higher education for yourself, purchasing a house or even car etc.

These goals should definitely be specifically identified and all investments should be made keeping in mind these goals. You must carefully understand your risk profile (which is distinct to each individual) based on overall risk averseness, family dependence, financial stability, etc. And then take a move or call.

Invest based on risk profile as well as financial goals

Such a mutual fund tip is going to help you achieve your financial goals when earning superior returns. Once you are investing in mutual funds, your entire focus stays on generating higher returns. But this is not really a right type of investment approach.

Mutual fund investment must be made only after you do goal based type of financial planning. By investing as per a financial plan, you may end up committing for the type of long-term. You must know that once you invest for the long-term, you produce superior returns via the power of compounding.

Lump-sum Investment and Systematic investment plans

There are two styles or types of investing in mutual funds:

  • Lump Sum investing 
  • Systematic Investment Plans (sips)

If you are such an investor who has the time and even expertise of timing the market then you can select lump-sum investing. However, remember that the common retail investors are better off investing through the mutual fund sips as well as SmartSIPs. In a systematic investment plan, the investment amount automatically  get debited at a predetermined type of date. This helps you in creating investment discipline.

The finest possible mutual fund investment tip for beginners is to simply invest in mutual funds through SmartSIPs. SmartSIPs are going to help you get better cost averaging and even shall be more profitable in long-term. 

Never underestimate the compounding factor  

Compounding is the extra gains you get when the returns are reinvested. Here, you just earn interest on the principal amount and even the interest amount.  The point is once you follow the compounding thing, you will see that your principal amount  will be two, three or even four times more after the entire duration of investment. Of course, the benefit will depend much on the overall duration of investments made.  For example, for ten years, twenty years and so on.

Exit is crucial like entry 

Exiting a fund when a market is quite bearish is a bad sort of idea . You know it is counterintuitive. You should definitely consider exiting when the specific fund is consistently underperforming for a duration of time, when the fund alters its investment objectives, when you actually wish to make a structural alteration in your portfolio and when you have accomplished the set financial aims from the fund.


To sum up , since you have a good idea about what you should do and what you must try to avoid; you can start your mutual fund journey. Whether to invest in the best long term mutual funds or any; you have to make choices. If you face any issues, you can take guidance of the experts too. 

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