There is absolutely no doubt that starting any form of investment as early as possible is a must. If you have been working for a while, it makes sense to start looking at the investment possibilities as soon as you can. The requirement could be anything to be honest, right from a child’s marriage to higher education that has been planned out, if you start out an investment early enough – you are sure of getting a large corpus at the end of the day. This would give you plenty of flexibility when you need to make a large investment. Even a small slice of the savings would lead up to a large corpus over a 5-6 year period.
So, if you were to choose to invest in mutual funds – how would you decide the kind of funds you have to take notice of and the ones you have to ignore? Here are a few pointers to help you make the tough call and to decide.
What kind of capital investments are you looking at?
The equity market is broadly divided into the large cap, mid cap, and the small cap. Quite similarly, it is split in the mutual funds market too and you have the option of deciding the kind of companies you get to invest in. If you are looking at a low-risk investment – you should be aiming at blue chip companies as investments and those that do not give you a large chance of risk. On the other hand, if you are looking at a higher risk option, you have portfolios that are on the smaller cap side and would give you larger gains at a higher risk.
What is your monthly saving limit?
The simplest rule to start saving is to understand the amount you can save. Before you even start saving, decide on the amount of money you can save each month and then spend the rest of the money. Many people suggest to save what is remaining of your expenses, but the smart investor saves first and then plans out the expenses of the month. So make it a point that you are cutting away the amount you have decided to invest and then look at the rest as expenses. You need to keep this number in mind as it is a commitment you are making and you have to adhere to it.
Who is your fund manager?
When you have a strong fund manager in place, half of your work is taken care of. You are sure to get better results when you have an investor with plenty of experience and know how. So, take a look at the kind of past funds managed and the way they have grown in time too. This will be the best way you can take a call on the kinds of returns that you can expect.
What is your lock in periods?
Surely a question that an early investor would be thinking about. If you have started investing recently, it makes complete sense to invest in longer timelines. This would increase the returns you have and also brings in a bit of discipline in your savings. Look at investing early so that you have larger savings in a short period of time.
Would this investment suffice:
Most of us look at making an investment keeping a due date in mind – this could be any event in your life and ensuring that you have taken the right amount is absolutely critical. So double check to see if your investment would cover the costs completely.
Each one of us wants to look at saving for the future and mutual funds in India are a great way to achieve this. You are sure of getting a much better return than dropping it in a fixed deposit and you are covering the higher costs of investment too. In case you are looking to invest today, a mutual fund would be the best way ahead especially if you are wary of investing in the equity market directly. You are protected from the volatility in the market and also given a fair idea about the kind of returns you can envisage. With this in place, you are more than sure of getting a heads-up on the kind of money you have to save and where you should be putting more of your money in. It would help to great depth if you read up about the different kind of investment patterns in play and how each of them gives different returns. There is no doubt that the right kind of fund investments will give you huge returns in the future and give you much to celebrate about. Make the smart choice today and save for a better tomorrow.