Mutual Funds
Mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities.
Equity Mutual Funds with a majority of the amount invested in stock market possess higher risk than the Debt Mutual Funds. Fixed Deposits remain unaffected from the inflation as the interest rate is pre-decided. While Mutual Fund returns are inflation-adjusted that enhances their capability to generate better returns.
Mutual funds are the most popular investment choice among investors. Advantages for investors include advanced portfolio management, dividend reinvestment, risk reduction, convenience, and fair pricing.
Be A Disciplined Investor
Investment discipline isn’t easy. Despite best intentions and claims to the contrary, many investors chase performance, react emotionally to market moods, and generally incur far more trading costs than good discipline would suggest. Even when there is a long-term plan in place, if it’s not followed, the plan is useless.
Six rules to disciplined investing. They will help to make better long-term decisions:
- Have a long-term investment philosophy.
- Form a prudent asset allocation based on this philosophy.
- Select low-cost funds to represent asset classes in the allocation.
- Maintain this portfolio through all market conditions.
- Don’t change the asset allocation due to recent market activity.
- Don’t hold back on new investments while waiting for market clarity.
