We know how volatile the stock market is and many of the highs and lows cannot be expected. Investing in mutual funds always helps the investor keep a disciplined way of investing and rather not getting much greedy for profits.
From past years the new investors are increasing drastically, and the goal is to book profits. Generally, short-term buyers have a mindset of buying at low and selling at high. But this does not suit in the long-term as it needs much fundamental analysis/study.
Investing in equity funds is always a safe option for long-term investing. Here are some tips for new investors to book profits:
1. Link investments to goal
Always planning makes vision for goal clear so it is much recommended to set a goal for the investment as it helps to meet the future financial requirement.
2. Portfolio construction
Build a strong portfolio by choosing the consistently performing mutual fund schemes which have generated a good consistent return. Choose between the small and mid-cap according to the risk level. Investing in index funds is another great way to begin the investing journey. Try to understand the main objective of the mutual fund scheme and choose accordingly.
3. Systematic Investment Plans (SIP)
A systematic investing plan is a simple organized and systematic plan of investing on a monthly or lumpsum basis. Here the concept of compounding is involved which gives much higher returns compared to other investments in the long term.
One’s investment through SIP helps them to stay disciplined and organized and avoid temptations to book profits or delay making investments based on market conditions.
4. Review regularly
Always review the performance of the schemes in which you invested and find out the reason for the high/low which would help in better decision making. Mainly the fund performance depends on the stock in which the fund manager invested. Try to compare the performance, return values to a previous value.
5. Regular plans or direct plans
The regular plan involves diversification of the pooled money into different financial instruments whereas the direct plan refers to direct investment without any help of mutual fund distributor which would include his fee or commission.
Making a beginning and being consistent is what matters at last. For a new investor it very much important to give time for funds to grow and some may outperform in the time being.
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