Is It Right Time to Invest in Mutual Funds?

A delayed investment is equal to an incurred loss of possible returns. If you keep the money unused, it is more likely to be spent away on trivial things. Therefore, the sooner you invest your money, the better it is for you. Where you invest is what you need to decide based on the market scenarios. For any investment that you undertake, you should first gain an understanding about it. Through this post, we shall try to understand mutual funds as a means of investment.

What Are Mutual Funds?

It is an investment where the funds of many investors are pooled together and further invested by fund managers to get the best possible returns for all the investors considered as one unit. The positive aspect of mutual funds is that your portfolio gets managed professionally at a minimal cost and you get the advantage of the economy of scale.

The mutual funds are fast becoming a means of achievement of financial goals, but is still haunted by the question “Is it right time to invest in mutual funds?” It is not easy to evaluate the best time to invest in them, but it is important for your earnings

When Should You Start Investing in Mutual Funds?

The answer is as soon as you have money to spare, even a small amount will do. But before you invest, you should consider buying into funds that have a low NAV. Rather than one that is already high. This gives you access to larger number of units as well as better scope for growth of your finances. 

Thus, you can look at the following three conditions to be met to start your investment:

  • The market is lower than ever
  • The returns from bonds are high
  • Infrastructure and real estate are at an all-time low

This scenario is almost an impossible one to get at any point, therefore, the best time to start investing in mutual funds is right now! Every day missed is equivalent to missing out on the returns that could be achieved.  

How Can You Best Invest in Mutual Funds?

In the current scenario, the best way you can invest in mutual funds is through a systematic Investment Plan or SIP as it us better known. This mode of investment makes sure that you need not worry about the bullish or bearish state of the market, but benefit from either.  The fund managers for SIPs buy more units when NAV is low and lesser when it is high which results in a decline in the average cost per unit.

What Factors Should You Consider When Investing in Mutual Funds?

Rather than the time of investment, you need to decide on which funds should you invest in. This will depend on your financial goals as well as your risk appetite. If you have fuds in low risk investments, you can use a part of your income to play around with high risk funds to maximise your financial returns. The Return on Investment is more achievable if it is made for a period longer than 5 years. If you are looking to save tax as well, you could consider ELSS schemes. 

Mutual funds are a great source of investment in any scenario. You can invest a lump sum, or you can go for an SIP and you can choose long term or short term. You can be assured of a decent return on your investment. 

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