Long Term Mutual fund investment strategy

Mutual fund investment strategy

Seasoned mutual fund investors rely on industry-trusted approaches to maximize their returns. For example, the market timing strategy is all about getting in and out of sectors and assets at the right time; while the buy and hold strategy believes in long-term holding irrespective of the temporary market fluctuations. The performance weighting strategy requires you to monitor your investments periodically and make adjustments.

Irrespective of your approach, a smart investment strategy in mutual funds often calls for simple and logical decisions. Here are a few smart investment strategies that you need to follow to maximize your profit from your mutual fund units.

Diversification

You’ve probably heard the phrase “mutual fund investments are subject to market risks”. While every investment has a component of risk, you can reduce it by diversifying your investments. Not all sectors and mutual fund types behave in the same manner; except in the case of an all-encompassing market movement. If you see too much equity exposure in your mutual funds online; it is time to invest in some debt funds to offload the risk with steady and assured returns. If you are skeptical about the financial market, you can invest in gold funds, which often react positively to market uncertainties. 

Invest regularly

Regular investment in mutual funds, particularly through SIP, helps you to average out your investment cost. Units bought at a higher price is evened out as fund managers pick up cheaper units when the market is down. Your NAV continues to grow in the long run as the market itself grows. This enables you to enjoy the benefits of rupee cost averaging. If you are investing in mutual funds for the long-term, regular investment without any panic interventions helps your investment grow. Also, keep a target to step up your SIP investments with each passing year so that you can save up for bigger goals in the future.

Monitor regularly

You should check your mutual funds online regularly to check the performance of the schemes you invested in. You need to monitor how well your schemes are doing in comparison to peer funds and the benchmark indices. If you notice that your scheme has been performing quite badly over a period of time; you can take the right decision to remedy it.

Pay attention to market corrections

If you invest in mutual funds regularly; your scheme will accumulate a higher number of units during market corrections and less during booms. But if you have plans of lump sum investments; market corrections should be looked at as the ideal time of investment. While market corrections raise alarm bells for your investments’ worth, it is also an ideal time to pick up units that show potential for growth in the long-term.

No matter your investment strategy; one thing you need to remember is to invest consistently to make sure you see returns in the long term. For ease, you can look at the Tata Capital Moneyfy app to compare between different plans and choose the right one for you.

Author Bio

Chetan Sharma is a blogger and digital marketer by profession. He handles a network of multiple websites like samacheer kalvi books & various others. He helps clients all over the world to achieve digital success.

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