Making the right mutual fund investment cannot only help you secure your future but also allow you to achieve your financial goals with ease. In order to select the right mutual funds to invest in, you must research the market carefully. Potential returns and likely risks are the major factorsthat you must consider before making a mutualfund investment. A large number of borrowers are often confused as to what is the right mutual fund to invest in. Here are some tips and tricks that can help you analyse whether a particular fund is right for you.
Tips for making the right mutual fund investment
- If you are in your early 20s, and have secured your first job recently, you can afford to take higher risks while making a mutual fund investment. This is because you are likely to have fewer financial responsibilities at such a young age. If you have a high-risk appetite, your portfolio should be heavy on equity mutual funds, i.e. around 75-80% of equity funds.
- As you get older, your focus may shift to meeting your financial goals such as purchasing a house, getting married, etc.To take care of these financial requirements while keeping your investment corpus safe, you can consider opting for comparatively safer assets such as debt mutual funds. Make sure that you reduce your dependence on equity mutual funds simultaneously. Your investment portfolio should consist of around 50% equity mutual funds and around 35% and 15% investment in debt and cashrespectively.
- You can also invest in Equity Linked Saving Schemes (ELSS). This will help you save taxes on your income from salary, business, or any other source. Besides, investing in large-cap mutual funds that invest in blue-chip stocks would also be a good option.Since blue-chip stocks are stocks of renowned companies, the risk associated with them is comparatively lower.
- When you are in your early 50s, your liabilities may increase further and you might also start looking forward to retirement. Therefore, it is advisable to opt for investment with moderate risk. Your investment should be tilted towards debt funds, i.e. around 50%- 60% on debt mutual funds.
- In case you are approaching your retirement, you shouldn’t take significant risks when it comes to investments. Therefore, at this stage, you should heavily be invested in debt funds, with a small exposure to equity funds.
Proper investment planningcan help you lead a financiallystable life. With leading banks, you can easily open a savings account and invest in mutual funds online from the comfort of your home. You can also track the performance of your funds with the help of personalised mobile apps of the bank.
High liquidity, great returns, and no-lock in period are some of the major perks of investing in mutual funds. If you are just starting with your investment journey, you can consider seeking the help of a financial advisor to make the right mutual fund investment.
