With the current highs and lows of the market, mutual funds seem to be the best and most profitable bet for mutual fund investors as the way to accumulate higher profits and gains for their investments. Investment managers may also help a fund prosper in troubling times, by helping money grow in a quicker and more consistent manner than what was expected of the existing market scenario. Although it is quite normal for investors to panic with even a slight fall in the performance of the markets, many industry observers view this as the golden period, during which investors can buy funds cheap, leading to the concept of long-term industry benefits of buying in panic.
The first and foremost step while making an investment in a mutual funds scheme is to identify the purpose behind making such an investment. If you are making an investment so as to acquire profits over a long period of time, then it is best to invest a major sum of your investment in equities, while investing the minor portion of it in debt funds. On the contrary, if you are seeking to make investments solely for the purpose of earning a regular income, it is beneficial to invest a part of your funds in monthly income plans. You could also apply the combination of debt-equity exposure, a formula that is used to devise your debt-equity ratio as age increases. The rule of thumb is normally regarded to be in such a manner that the equity exposure percentage should be equivalent to 100 minus the investor’s age in the portfolio.
It is recommended that your portfolio should have a high equity exposure, especially when an investor is in the stage of accumulation over a long period of time. For example, if you have made an investment for distribution, your portfolio should preferably be 60% in debt, 10% in golf funds and 30% in equity schemes. The winning market players in the current market scenario for mutual fund schemes are HDFC Equity, Discovery, DSP Blackrock Top 100 and IDFC Premium amongst others, while Reliance Gold Fund and Birla Sun Life Dynamic Bond Funds are prominent debt fund players in the market. While gold funds have been prominent players in the market over the last year, income funds and balanced funds have also performed considerably well in the given market conditions.
But remember, any financial imprudence can result in the complete wipeout of your hard earned savings and pulling down your finances to a negligible low or even to negative returns. Further prompting you to opt for debt like personal loans, home loans etc to bridge the gap between your finances and your goals. Although loans are quite easy to get these days, it is there repayment that will question your financial ability not only in the present but also into the future. If you default on your credit payments, you Credit information Report (CIR) will show those financial dents thereby reducing the chances of your loan application to be rejected. Therefore in order to ensure a good credit standing, it is important that you do not default on your payments. The whole idea of savings and investments is to safe guard not only your future but also of your dependents. Make sure that you get all the right information from credible sources such that your funds are in the safe hands. Do not pay heed to the advices forwarded by other peer investors since their investments goals, requirements; risk appetite is definitely going to be different than yours. Therefore it is important that you take hold of a genuine financial advisor and chart out your investment routes properly.