How Mutual Funds are suitable for Long Term?

By Ashish Kyal – 

Mutual fund and stocks are similar in nature as their prices are market driven and when you invest there is no guarantee of how much is the return on it. However, their approach is varied individually. When you invest in mutual fund, you are investing with an underlined assumption that there are professionals managing your money so you do not have to monitor on regular bases and the risk associated is comparatively less, as the funds are invested in a bunch of shares (the reason they are called “Mutual” Funds).

Firstly, how “Long” is the long term? Definition of long term is always a matter of opinion. Everyone has their own view, to some people three year is long term and to others it is five to ten years. But ideally minimum of 5 years is considered to be long term.

It is important to have a realistic approach while investing in fund. Mutual fund should be chosen with careful thought and analysis, but after investing in mutual fund one should have good faith in it. If fund stops giving positive return for some time, one should not exit the market (sell off). Duration of market cycle unlike before has shortened and they can be very volatile. It is often seen that investor watch their fund carefully and fail to resist the temptation of switching.

It is often seen that, it’s not necessary that the fund performing well for one year will give a consistent and high performance throughout. There is always a difference level of returns of one year and five year period. So it is better to look at 3-5years period to get an accurate picture.

As past performance indicates the return is always high as compared to short term whereas it is safer and has a great opportunity of capital growth. So why to wait? the opportunity is at your doorsteps. Invest Now   in our Top recommended funds –

  • ICICI Prudential Value Discovery Mutual Fund
  • Birla Sun Life Tax Relief 96 Mutual Fund
  • Axis Long Term Equity Mutual Fund

 

 

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