Choosing The Best Mutual Fund For Investments

Mutual funds are the best options since you can broadly diversify by owning a large array of stocks or an investment instrument. In addition to this, they also allow you to acquire a handsome income over a period of time.

A mutual fund investment allows you a good amount of leverage since the risks are minimized.

The title bears no semblence to the content.

But I agree. Mutual funds' investment, especially via SIP, is the best bet who like to lessen some risk and expect decent returns.

the content is too small to really define mutual funds...

i exactly dont even know how they do.. but they are sucking your money any way..

i am too interested in investing in mutual funds but i don't want to take risk, many of my friends are not able to get the actual deposited amount and have risked their hard earned money... rather than going for mutual funds my advice is bank term deposits which gives you guaranteed return after some fixed time.

Originally Posted by jain347

i am too interested in investing in mutual funds but i don't want to take risk, many of my friends are not able to get the actual deposited amount and have risked their hard earned money... rather than going for mutual funds my advice is bank term deposits which gives you guaranteed return after some fixed time.

I am extremely surprised. So you think banks give you assured returns. Assured in what sense? In absolute terms only. Does the bank deposit take into account the inflation and thus the devaluation of the currency. Say you invested Rs. 50,000 a year ago and 8.5%. You will get Rs. 54,250 a year later. But inflation in the last year has risen by 17~20%. So what is the real value of your return?

People have been told of dream kills at the stock market - so and so made 200%, so and so made 400% and so on. People are fed with these once in blue moon stories and when that does not work, we are disappointed, to say the least.

The reasons are quite there for all to see. The problem with most small investers (like us) is that we panic. We enter the market when it is on a high and exit when it crashes. It should be exactly be reverse.

But how does one know when the market is high or low? This is where systematic investment plan (SIP) helps. With an SIP, you keep investing a definite sum of money in mutual funds. So you invest every month whether the market is up or down. When the market goes up, the NAV of the MF's go up and our investments rise. When the markets crash, the SIP amount is able to buy more units than before. So when the bull run starts again, the cummulative value rises again.

People have become hasty or greedy and expect instant returns. This happen rarely, in spite of so many fairy tales going around.

What people should do is:

a) keep a horizon of 3 to 5 years
b) expect modest but better returns than bank deposits, say 25%

As soon as you hit 25%, you should start selling and book your profit.

Believe me. I have made over 35% in the last two years. Which bank deposit is going to give these kind of results.

A smart invester does not put all the eggs in one basket. One should do the following:

a) First and foremost, invest in property for self occupancy.
b) Keep at least 25~30% of liquid investment in debt instruments such as bank FDs, post office deposits, etc.
c) Invest annually in PPF. Set your own amount according to what you can spare. Remember that PPF is long term investment and you cannot withdraw suddenly the full amount.
d) Buy 10 gm of gold every two months.
e) Invest the rest in equities - MFs or shares. For those, who are averse to risk, use MFs via SIP mode.

I suggest reading the following articles:

1. http://www.indiabroadband.net/invest...est-smart.html
2. http://www.indiabroadband.net/invest...t-via-mfs.html