Mutual Fund Investing: Pro Tips For Good Returns, How To Make Sure You Don’t Lose Money

Mutual Fund Investments: People know that mutual fund investments are made with a long-term plan of 5 to 10 years with moderate risk and are capable of giving returns up to 15%. Mutual funds are a great investment option but most people do not make the most of it. Some also have to suffer due to lack of knowledge.

Since mutual funds invest in equities, their volatility is high. This is the reason why finance experts recommend long-term investments. Investments made for 5 or 10 years give good returns in proportion to the inflation or rate of inflation.

Features and types

The fund manager earns profit by investing your invested money in different stocks and in return keeps some amount as commission for himself. There are asset management companies to manage the fund house, such as HDFC Mutual Fund, SBI Mutual Fund, Aditya Birla Mutual Fund, etc.

There are three types of mutual funds – equity, debt and hybrid. If you are able to take risk then you can invest money in equities. If you want good returns with less risk then you can invest in debt. And if you want to ensure moderate risk-return, investing in a hybrid would be a better option.

Mutual funds are also divided into several sectors, including technology, banking, automobile, agriculture and FMCG. If you can predict which sector will be profitable in future, then you can invest there.

There are also some tax saving funds where you can get tax deduction under section 80C. But here you will not be able to withdraw money, as it has a lock-in period of 3 years.

how to invest

The first method is Systematic Investment Plan (SIP) and the second is lump sum investment. You can take SIP directly. This will enable you to develop the habit of regular saving and investing. But lump sum investment is recommended when the market is in a downtrend and it is likely to strengthen in the future.

Check the following things first

First of all, it is important to check the return process of the fund for the next 5 to 10 years. The commission ratio should also be checked – it should not exceed 1-2%. You also need to check the entry-exit load. It means how much money can be deducted while investing and if the money is received after maturity then how much will be deducted.

Here’s How You Should Invest

Get your KYC done by online goal setting or through a consultant. Register on the website by providing your PAN, Aadhaar and canceled cheque to the mutual fund company. Their staff will come and take necessary documents from you. Another way to do it is online. There are many apps through which you can invest easily.

How much profit will you get?

The first advantage is high returns. You get good liquidity even at moderate risk. You can invest money in it and withdraw it anytime. The disadvantage is high volatility. It can go up or down 50% due to market volatility. Even if we assume that you will not get 15% return every year, after 5-10 years the average return will be up to 13-15%.

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