Direct participation in the equity markets is very risky. However, it requires considerable caution. Chances are that if you go in without thinking, nothing can stop your ship from sinking. Yet it requires constant dedication and vigilance, and who has that kind of time, right? In such a scenario, invest in Mutual Funds; because the fund managers will do the thinking for you, and they’ve got all the time and expertise to do it well. Like they say, choose the manager, not the fund.
But before you decide to invest in Mutual Funds, take note of these 5 points:
1. SIP is best: Systematic Investment Plans, where small monthly investments are made on your behalf in the Mutual Fund of your choice, have proven to generate better returns over a long-term.
2. Diversification: For a smaller investment amount, you get invested in various sectors and different stocks.
3. Timing not relevant: With Mutual Funds, you get more units when NAV is down. In the long run, whether the markets are down or up, you profit.
4. Fees & Charges: Carefully check whether your profits aren’t being squandered in entry & exit loads, switching charges, annual expenses, service costs etc.
5. Tax benefits: Taxes might gobble up all your gains, or even increase your liabilities. So carefully go through which sections of the IT Act apply when you invest in Mutual Funds.
Think long-term, think better returns, think Mutual Funds.
0 comments: