There are many useful tips and rules to follow if you want to achieve success in investing. Here are six important tips that you must consider if you want to make winning investments.
There are many useful tips and rules to follow if you want to achieve success in investing. Here are six important tips that you must consider if you want to make winning investments.
Follow portfolio diversification
Put away your money in several baskets, rather than in a single one. In the event that one of your investments sinks, all will not be lost. If you follow intelligent portfolio diversification for your investments, then you can be sure that in case the markets face a volatile spell, a debt component in your investment portfolio will act as a balancing factor to minimise your losses in the equity sector.
To find success in investing in Mutual Funds, it is important to spread your investments across different categories of Mutual Funds.
Time the market? Nah! Don’t do that
It goes without saying that timing the market is rather difficult. The stock market is becoming increasingly unpredictable. Here is what investors can do. Rather than lose sleep over timing the markets correctly, investors can choose to invest intelligently. Invest for the long-term and choose to invest in Mutual Funds through a Systematic Investment Plan. Take advantage of the concept of rupee cost averaging. Long-term investments mean that your money can benefit from the power of compounding.
Identify your risk appetite
Risk tolerance is the level of market volatility you are comfortable with on your investments. Do you lose sleep over losses brought on by a bear market? Are you willing to remain invested in the Mutual Fund despite a market slump? You must ideally invest according to your risk appetite. There are different kinds of investors – from the risk averse to the more adventurous kind.
In case you are not comfortable with a bear market that sinks more than 20%, you may want to consider investing in lower risk investments to start with.
Set investment objectives and stick to them
Plan your investments wisely. Set your goals before investing in Mutual Funds and organise your finances accordingly. How much time are you giving yourself to get that new home?
This will define your investment horizon. What are you saving money for? What is your risk profile? Do you want to be adventurous with the investments you make, or will you prefer to be a safe and conservative investor? Find answers to these questions in order to outline your various investment objectives.
Additional Reading: Money Sitting In Savings Account? Time To Start Investing!
Select an asset allocation strategy
Once you decide your investment objectives, choose an appropriate asset allocation strategy for your investments. Try to strike a clever balance between Equity Mutual Funds and Debt Mutual Funds.
Simplify investing
Making rash investment decisions can make investing unnecessarily complicated for you. Here’s a tip: A well-diversified portfolio invested in low-cost Mutual Funds has the potential to show good returns over a long investment tenure. Diversify with the right type of Mutual Funds and you will definitely stand to benefit.
Look for funds with a low expense ratio
More money going out only means one thing, and that is, less money coming in. This is a simple rule of finance. For successful and profitable investments, excessive expenses are a drag on the performance of an investor’s portfolio. This negative impact is felt more strongly on long-term investments.
It is always wise to invest in Mutual Funds that have no sales load or expense ratio. Alternatively, look for funds that have an affordable or minimal expense ratio.
Here’s a tip: The low-cost Mutual Funds are generally the high-flying top performers over a long investment period i.e. 10 years or more.
With the right investment advice and a few calculated decisions, you can be sure of achieving success in your investments.
Start investing today and reap rewards with Mutual Funds.