A lot of people wish to make money by doing investment but lack of knowledge, expertise and time fail to do so. One of the best investment vehicles is Mutual Funds. Mutual funds have indeed proved that they are common investors’ best friend, when it comes to achieving various financial goals. Weather an investor looking for a regular income or create wealth over a long period of time,mutual funds are best choice. All you have to do is to choose a Mutual Fund scheme that matches your financial goal, investment horizon and risk profile.
At Arihant we help our investors to choose mutual funds that suit their risk profile and investment horizon and help in achieving their financial goals.
Here are few things to keep in mind to earn more through mutual funds by doing less
- Invest for long term
Wealth creation requires investing in the right set of mutual funds and patiently going through the ups and downs of the markets over long tenures. Don’t make hasty investment decisions which are not aligned to your investment plan. Think over your financial goals in detail. This would help to choose the best investment vehicle to achieve it. Invest through SIP which would help to average out the market volatility. Don’t change your investment pattern based on the present market movement.
If an investor invests for a long-term, he gets the benefit of compounding. When money is invested for a longer period of time, interest on interest is earned, thereby making the money compound into a large sum.
- Understanding the inflation
Even though FDs offer guaranteed returns, after deduction of inflation and tax, real returns are very minimal. To build wealth over long term one need to invest in equity mutual funds because it has power to beat the inflation and give higher returns over the long term.
- Finance your future dreams through SIPs
Any dream can be achieved if you work towards it. Building Wealth is no different. Systematic investment plans (SIPs) allows you to invest small amount of money in regular interval (on a monthly, quarterly basis), in order to build adequate corpus over the years. Since this SIP amount is auto-debited from your account on predetermined date, it ensures regular and disciplined contribution towards wealth creation. You can start Systematic investment in SIPs with a minimum contribution of just Rs.500.
Also, since markets are volatile in nature, rupee cost averaging can be beneficial for investors, as it averages out the cost at which you buy mutual fund units. In addition to this, it also helps in eliminating the need to time the SIP investment and helps you to reap higher returns due to the power of compounding.
- Goal based Mutual Fund investment
For mutual fund investment one need to identify his risk appetite and time horizon of goal based investment. If you are risk-averse, you should stick to debt mutual fund schemes. If you have high tolerance for risk and you are ready to take risk to earn extra returns, you should invest in equity mutual fund schemes.
- Professionally managed funds
A mutual fund is a financial intermediary, set up with the goal of professionally managing money pooled from a large number of investors. By pooling money together in a mutual fund, investors can enjoy economies of scale. Instead of each investor trying to undertake his or her own investment research, a team of professionals can do so for them together. Mutual funds are run by mutual fund companies, also known as Asset Management Companies (AMCs). Each AMC operates a number of funds suited to different types of investment needs.
For the individual investor who doesn’t have much time to study and research investments himself, mutual funds are one of the best options for reaping the benefits of different types of investments with minimum effort.
- Regular Income
Many mutual fund investors opt for dividends to receive regular income from their investments. Many times AMC can skip dividends if scheme has not generated enough profit.
In such a scenario, it is better to opt for a Systematic Withdrawal Plan or SWP. SWP is like SIP, but in an opposite way. Just as an SIP allows you to invest a fixed amount regularly in a mutual fund scheme, SWP allows you to withdraw a fixed amount regularly from a mutual fund scheme. However, investors need to be careful about the amount or percentage they want to withdraw if they want to preserve the capital. A higher percentage withdrawal regularly would deplete the capital over a long period.