Your financial portfolio is a roadmap to achieve your financial objectives. Review them regularly and make necessary changes if your goals change along the way
More and more women are actively managing businesses and becoming financially independent. Here are a few mutual fund investment tips that every prospective investor must be aware of.
Recognise, prioritise your financial objectives
Before you begin to invest in mutual funds, recognise and prioritise your goals. To ensure better direction and success for your mutual fund investments, try to link your investments to specific financial goals. For a woman, financial objectives may vary basis her age, marital status, number of dependents, financial situation, etc. For instance, for an unmarried woman it might be more important to create a corpus for her wedding. On the other hand, for a mother, investing for her child’s higher studies would be a priority.
Avoid choosing a fund based on the NAV
NAV stands for net asset value. It refers to the fund’s market value on any particular day. While choosing a mutual fund, investors get carried away by lowNAVs, as it is cheaper than mutual funds that are priced at higher NAV. NAV is irectly proportional to the AUM (asset under management) and the total units of the fund. For example, if you invest Rs 5,000 in two different funds with NAV of Rs 10 (A) and `50 (B) respectively. The different NAV values imply that you hold 500 units of A and 100 units of B, total value being the same, i.e. Rs 5,000. So, whether the NAV is high or low is only an indicator of the number of units an individual would hold and not the performance of the fund. Instead, look at the returns of the fund over different time periods and then compare it to the benchmark and their peers.
Choose the mode of investment
You can invest in mutual funds either via SIP way, i.e. Systematic Investment Plan, or the lumpsum mode. Both investment modes have their own sets of pros and cons. An SIP investment helps to invest an insignificant amount in regular funds. On the other hand, a lumpsum in mutual funds means you invest the entire investment amount in one go. Choose the one that suits your profile.
Review your portfolio regularly
Your financial portfolio is a roadmap to achieve your financial objectives. Make sure to review them regularly and make necessary changes if your goals change along the way. You might consider redeeming your investments for better performing mutual funds if they have been constantly under-performing for a long time.
Realise the importance of investing and begin your investment journey as soon as possible. You can also take the services of a financial advisor to guide you on your investment journey.
Source: Tax Guru