Mutual Funds are the best tools for long-term wealth creation. But, the challenge is to identify good and top performing mutual funds that can help you in achieving your Financial Goals. There are hundreds of mutual fund schemes which are available in the market. Besides this, there are plethora of NFOs (New Fund Offers, new schemes) which keep hitting the market. Identifying good mutual fund for long-term investment is not an easy task.
Remember Wealth creation’ is a boring activity like Test cricket where a quick fifty or hundred may not always win you a game. You need the solidity and consistency of a Rahul Dravid or a Laxman more often than the flamboyance of a Kohali/Sehwag to be able to emerge victorious over the five days.
Here are some rules to be followed for the SIP
- Invest in Equity mutual funds if your time horizon is at-least 10 years. You can opt for balanced funds if you time horizon is between 5 to 10 years. Invest for long-term goals.
- Understand the risks associated with equity mutual funds. Kindly do not invest for quick gains or based on tips.
- Continuously track and monitor your mutual fund portfolio. If possible invest through online platforms.
- Do not time the market. Timing the market is almost impossible. Anytime is good time to invest in or to start SIPs.
- If your funds are generating negative returns, do not panic. Do not redeem or stop SIPs based on short-term market movements. Continue your SIPs as long as possible. You may also consider increasing your SIP contribution amount on yearly basis. Small investments made at regular intervals can yield much better returns over a long period of time.
- It is advisable to build a mutual fund portfolio based on your Financial Goals. You may opt for variety of portfolios of mutual funds for different set of goals.
- Opt for Growth option of mutual fund schemes.
- If you are new to mutual fund investments then start with balanced funds.
- Kindly do not churn your portfolio at regular intervals
- Do not expect abnormal returns.
- Say NO to New Fund Offers (NFOs).
- Last but not the least; remember
“Mutual Fund investments are subject to market risks. Past performance may or may not be sustained in future.”