There is a popular English adage - "Get Rich or Die Trying". Most of us probably live by this adage. While some end up taking risks by getting into business, others probably bank on lady luck to get rich. And probably, the rest, like the adage goes, ‘die trying'.
This article is not to give out a quick fix solution to get rich by investing a small amount of INR 2000 every month, but rather it will encourage a habit for investing small sums which can eventually create a larger corpus of funds for an individual.
We intend to target first time or non-expert investors, who believe investing through mutual funds (MFs) to be riskier and time-consuming. The article also tries to dispose off the notion amongst such investors that mutual funds have to be constantly monitored.
The three most common reasons why retail investors do not invest into MFs could be:
1. Lack of time - ‘I will have to regularly monitor my investments and I don't have that much time'
2. Lack of resources - ‘I don't have access to research reports and I don't know which fund to choose'.
3. Lack of knowledge - 'I don't have any knowledge about mutual funds. How can I make money?'
If you are starting out as an investor, then there are chances that of all these thoughts have crossed your mind. This article will help to clarify these doubts.
ANSWERS TO THE THREE BASIC QUESTIONS
1. Lack of time -' I will have to regularly monitor my investments and I don't have that much time'.
If you are a long-term investor then monitoring your portfolio once or twice a year makes sense. One does not need to monitor his/her portfolio on a daily/monthly basis unless the investment is for a short term.
However, you should try to rebalance your portfolio on a periodic basis. Rebalancing helps you protect against downside and ensure that you maintain the risk-reward ratio in your portfolio as well as take advantage of the market situation.
One should assess and rebalance the portfolio composition when:
* You are short of/in excess of your investment objective
* Your lifestyle changes
* Your risk tolerance level shifts
However, there are external parameters that may determine the percent change in asset allocation, like:
* Capital Market Fluctuations
* Macro-economic environment
* Transaction costs levied while rebalancing
Check whether your portfolio composition meets your investment goals, irrespective of market turmoil!
Know more about rebalancing: Stay Invested and Rebalance to Avoid Bad Times
2. Lack of resources - 'I don't have access to research reports and I don't know which market and fund to choose'.
Fundsupermart.com's research desk prepares reports for investors, so that they can know which funds they can buy and which ones to avoid. Our Recommended Funds list sieves out the best in the market and our analyses of the markets gives you a good idea of where the best opportunities lie in the different equity and fixed income sectors, as well as the risks you should take note of when investing in various sectors.
Our interviews with fund managers are also meant to give you direct access to what the investment specialists in the industry are doing to manage their funds.
To invest on a monthly basis, Mutual Funds provide the Systematic Investment Plan (SIP) route for retail investors. All you need is to choose the funds and get started. For SIPs, the minimum initial investment for most funds is INR 1000 per month. However, some funds houses have lowered their monthly amount to INR 500, so that more and more people can invest in mutual funds.
3. Lack of knowledge - ‘I don't know how; it's too complicated!'
Fortunately, there are distributors who can simplify things for you. Fundsupermart.com has simplified reports as well as Client Investment Specialists who will help you understand all about mutual funds over the phone or email, so that you can sit back and decide where you want to invest. If the above concerns have been successfully addressed, then understand how a winning mutual fund portfolio could be constructed to help you become a millionaire.
Investing into mutual funds is very easy compared to other asset classes and moreover they are managed by professional fund managers who know how to allocate and manage the money in volatile market situations.