Mutual funds are now opted for by a large section of investors who want to recoup gains from the volatile equity markets but with a caution and if you have also splurged your money into this category of investment option, then here is help to enable you earn some extra bucks. Do remember while fund managers work to return a handful of gains to several investors, you through a pro-active and intelligent strategy can make money reap you money by a larger amount.
Here are hence some suggested strategies for making some extra gains over and above what fund manager provides you with:
1. Choose direct plans: Now with the direct plans available that spare you of the brokerage cost, do purchase them instead of the regular ones. They are available with the no hassle from the AMC's website or from the mutual fund utility website. Such plans come with lower expense ratio which over the term of your mutual fund holding translates into bigger gains or returns.
2. Take the SIP route: SIP is mistaken to be an investment option while it is just a mode for investing into mutual funds which entails regular payment of a fixed sum into the investment for a pre-defined period. The mode enables you to accumulate a large corpus over some time frame to meet your future financial goals through the power of compounding and rupee cost averaging.
3. Go for dividend plans: Though LTCG tax on equity mutual funds has been announced with effect from the beginning of the current financial year, any dividend earnings made, do not arise tax implications in the hands of investors. So as a prudent investor choice, go for dividend plans after paying heed to all other important parameters.
4. Build a diversified portfolio: As like your complete financial portfolio that calls for diversification across asset types, mutual fund investment also needs to be diversified across some 4-6 funds to reap in optimal risk-adjusted returns. But the asset allocation should be done basis your investment goals, horizon and risk-profile.
5. Age-related asset allocation plan: In general, investment experts recommend investment mix of debt and equity to be as per your age. For equity investment, the amount or percentage equal to 100-your age could be deployed into equity while for debt your age minus 10 can be allocated to this otherwise safer investment option.