Fri. May 24th, 2024
mutual fundsmutual funds

A lot of people understand the power of investing; however, they fail to grasp the power of right investing – knowledge of how the mutual fund market functions will make all the difference in the world. Investment, just like art, when done correctly, can do wonders. Here are some tried-and-tested tips for smart investing in 2021.

#Tip 1 Make sure your schemes are in-line with your objectives

Before you invest in mutual funds online or stocks, ensure that your chosen scheme is in line with your investment objectives. Different individuals have different objectives – retirement planning, building a corpus for higher education, and so on; determine yours and then choose a scheme – analyse the past performance of the scheme and consider the time horizon and other related factors before you finalise.

#Tip 2 Assess your risk profile

When it comes to MFs, an investor cannot do without determining their risk appetite – tolerance of market volatility – which significantly affects returns. On such basis, investors can be classified as risk-averse, risk-neutral, or risk-seeker. Assessing this aspect will help you invest in the right type of funds – a risk-seeking investor must invest in equity funds, whereas those who wish to avoid risks must invest in debt-oriented funds.

#Tip 3 Know all about the different mutual fund categories

Besides the basic categorisation of lumpsum or SIP investments, MF schemes are further divided into different categories, each serving distinct individual needs. For instance, – equity funds are ideal for risk-seeking investors, debt-oriented funds are ideal for risk-averse individuals; whereas hybrid funds are for those who wish to have a balanced portfolio. It is essential to choose the right category of funds to meet your investment objectives.

#Tip 4 Always diversify your investments

“Do not put all your eggs in one basket!” Similarly, never invest your entire corpus in a single mutual fund scheme. The safest yet highly profitable approach is to invest in multiple MF schemes so as to diversify or spread the risk. As a result, even if one of the schemes does not perform as expected, you can rest assured that other schemes will compensate for its performance. You will meet your investment objectives when you ensure that a single apple does not spoil the whole lot.

#Tip 5 Understand MF taxation and choose ELSS

The taxation rules in MFs are different for equity and debt-oriented funds. Hence, you should go through each and choose the one whose capital gains match your investment goals. However, it is always better to add an ELSS or Equity Linked Savings Scheme to your investment portfolio. Under such funds, you can claim tax deduction up to Rs. 1.5 lakhs, according to Section 80C of the Income Tax Act, 1961. However, an Equity Linked Savings Scheme has a lock-in period of three years.

Ready to start your smart investment journey? Get going right where you are with the help of smartphone investment applications like Moneyfy! You can browse through different schemes, compare between each, and choose the one that suits you best based on your risk appetite, investment approach, and other requirements. If you want to invest in mutual funds, apply online for a hassle-free experience.

By admin

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