Query Corner: Mutual Fund
Our expert guides you in matters relating to mutual funds.
Merits of sips over lump sum investments
I am 25 and want to invest Rs 20,000 in non-tax saving mutual funds. Please suggest a suitable fund. I will need the money in 10 years.
ankurbhutani 85@hotmail .com
Since you are young, you should save regularly through systematic investment plans than lumpsum investments. By investing a fixed amount at predetermined intervals, the trouble of figuring the best time to invest is eliminated, which offers an efficient way to ride market volatility. For a 10-year time frame, consider large-cap funds such as Franklin India Bluechip or IDFC Imperial Equity Plan A or invest in large- and mid-cap funds such as Birla Sun Life Frontline Equity Plan A or HDFC Top 200. They are 5-star rated with a proven track record. Make sure to track the progress on your investments to evaluate their performance at least once a year and alter the fund selection if need be.
Be clear about your financial goals
I want to invest Rs 1 lakh in a mutual fund. Please suggest the right approach and the best fund that I can invest in?
kamalkant16@gmail.com
Lump-sum investing is not the best way to invest in mutual funds. You should look at investing regularly through systematic investment plans. Before you start, you must have a financial goal or need. This approach will help attain the desired clarity on the investment objective. You may have goals such as building a corpus for the down payment for a house or planning for your retirement or a childs education. Select a fund that will work in sync with your investment objective and is highly rated. Look for a fund that is consistent! with a proven past-performance track record. Also analyse the funds performance over the long run in both bull and bear markets. For instance, if your investment horizon is over five years you can safely consider investments in a mix of large cap and large- and mid-cap funds.
Know when to retreat
My mutual fund investments from 2008 are still making losses. Should I hold on to these investments or exit the funds?
satya8354@yahoo.co.in
You may have actually caught the funds at their peak in 2008 when the markets were at an all-time high. This may have further added to the disappointing results. If the performance of the funds that you own, has been consistently deteriorating; you should make an exit. You can learn a lesson from this experience. Regularly track the performance of your funds. This way you can note the dip in their performance in comparison to the benchmark and its peers. If a fund is continuously lagging in performance and losing on the star ratings, it is wiser to head for the exit.
Merits of sips over lump sum investments
I am 25 and want to invest Rs 20,000 in non-tax saving mutual funds. Please suggest a suitable fund. I will need the money in 10 years.
ankurbhutani 85@hotmail .com
Since you are young, you should save regularly through systematic investment plans than lumpsum investments. By investing a fixed amount at predetermined intervals, the trouble of figuring the best time to invest is eliminated, which offers an efficient way to ride market volatility. For a 10-year time frame, consider large-cap funds such as Franklin India Bluechip or IDFC Imperial Equity Plan A or invest in large- and mid-cap funds such as Birla Sun Life Frontline Equity Plan A or HDFC Top 200. They are 5-star rated with a proven track record. Make sure to track the progress on your investments to evaluate their performance at least once a year and alter the fund selection if need be.
Be clear about your financial goals
I want to invest Rs 1 lakh in a mutual fund. Please suggest the right approach and the best fund that I can invest in?
kamalkant16@gmail.com
Lump-sum investing is not the best way to invest in mutual funds. You should look at investing regularly through systematic investment plans. Before you start, you must have a financial goal or need. This approach will help attain the desired clarity on the investment objective. You may have goals such as building a corpus for the down payment for a house or planning for your retirement or a childs education. Select a fund that will work in sync with your investment objective and is highly rated. Look for a fund that is consistent! with a proven past-performance track record. Also analyse the funds performance over the long run in both bull and bear markets. For instance, if your investment horizon is over five years you can safely consider investments in a mix of large cap and large- and mid-cap funds.
Know when to retreat
My mutual fund investments from 2008 are still making losses. Should I hold on to these investments or exit the funds?
satya8354@yahoo.co.in
You may have actually caught the funds at their peak in 2008 when the markets were at an all-time high. This may have further added to the disappointing results. If the performance of the funds that you own, has been consistently deteriorating; you should make an exit. You can learn a lesson from this experience. Regularly track the performance of your funds. This way you can note the dip in their performance in comparison to the benchmark and its peers. If a fund is continuously lagging in performance and losing on the star ratings, it is wiser to head for the exit.
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