Mutual Funds: The right time, how to and where to invest!

By Ashish Kyal –

Once bitten, twice a shy! This saying goes to many people who started investing in Equity Mutual Funds in late 2007 and early 2008 i.e. at the peak of market. Not only that, they started with investing large chunk of money at one go rather than a SIP route. Outcome: Markets fell sharply in next few months and their investments were reduced significantly, in some cases to less than the half. What this shows is timing in the market is very important, that is when you enter and how you enter.

Systematic Investment Plans (SIP) reduce the impact of time to great extent as you get the benefit of rupee cost averaging which is a highly disciplined manner of investments in equities. With SIP, investment is possible with small sum of money invested regularly to accumulate wealth.

With solution timing the market right, we move to the next question- Where to invest?

Investments in equity mutual funds should be done with long term perspective and by long term, we mean at least 5 years. Equity mutual funds can be majorly classified under Large Cap Funds and Mid-Small cap funds.

Large Cap Funds: A diversified portfolio of top 50-100 companies in terms of market capitalization (a.k.a. Bluechip companies) is considered as safer for first time or low risk appetite investors.Large cap companies are regarded as less volatile and proven to absorb worst of the worst shocks in economy.

Mid and Small Cap Funds: These are based on Mid and Small cap stocks. Although considered as volatile stocks, small and mid-cap are proven to be outperformers when markets recover from long lull. Over the long run, these funds have given better returns than large cap funds. However, risk of losing out the money arises when sufficient time is not given to investment in these funds to mature.

Other than these two major categories of equity mutual funds, some funds are index based funds i.e. they invest in Index (Nifty 50, BSE Sensex) stocks in same proportion as corresponding index. Hybrid funds invest money into equity as well debt, money markets etc.

We at periodically review performance of mutual funds across the categories. We use Elliott wave model in order to determine the maturity of trend and the funds that has potential to outperform along with inter-market analysis. We use patterns to determine the future path and not just past returns. This helps us to select the funds that have potential to outperform going forward. We advise a mutual fund by considering all your requirements such as corpus, time horizon and risk appetite.

You can directly invest through us. We are registered with NSE for distribution of mutual funds. We provide online portfolio access, monthly account statements along with a weekly mutual fund report which covers Elliot wave analysis, investment perspective, risk profile, fund data such as allocation, holdings, past returns etc.

So Invest smartly and take full benefits of high return Equity Investments!

Click HERE for more details.

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