Best Strategy to Invest in Mutual Funds: There is a lot of ups and downs in the stock market these days. Corona virus cases have become uncontrollable in the country. More than 3.5 lakh new cases are being registered in India in a day. In such a situation, many states of the country are doing hardening like lockdown. At the moment, investors are either afraid of putting money in the capital market, or there is a situation of confusion. Especially the fear of investing money in equity is high. In addition to asset allocation strategy, balance advantage funds are a better option in the current phase, the expert said. At the same time, if you talk about debt cutting, then you can choose ultra short-term, short-term and mid-duration funds.
Let me tell you that the second wave of corona virus in the country looks very dangerous. Nearly 3.5 lakh cases have started coming in a day. Due to this, the expert market is talking about being volatile. On the other hand, rating agencies are once again reducing growth estimates. This can affect the market sentiment. Investors are also afraid of lockdown, in which case the returns of equity can deteriorate in the short term. Experts say that in the current era, investors can choose the path of mutual funds instead of directly investing in equity. He also says that one should wait for the money to be placed in the lodgecap or midcap.
Balanced Advantage Fund
A Balanced Advantage Fund is a fund that manages allocation in a balanced manner in the equity and debt segments. It adopts the ‘buy low and sell high’ model to make money in the long term. This helps in balancing between equity and fixed income while saving tax. However, while investing in Balanced Advantage Fund, an investor should take into consideration risk, return, cost, investment limit, financial target, tax on returns etc. Here are some of its benefits ……
The assets of such funds are managed actively between equity and debt. To achieve long-term goals such as children’s education, marriage or retirement needs, investors may also opt for the SIP option to invest in a Balanced Advantage Fund. Can. It is also better for people who do not want to take market risk and are looking for tax-saving investments.
Investors who want low volatility often choose balanced funds. Because bonds provide more stable returns and usually do not face much volatility like stocks.
Asset allocation strategy
If investors follow the asset allocation strategy, then they should invest in equity and debt funds based on their risk appetite. If the risk appetite is high, then there should be 80 per cent allocation in equity and 20 per cent in debt. At the same time, if the risk taking ability is moderate, then invest 50:50 per cent in equity and debt. But if there is a conservative investor, then this ratio should be 30:70.
The advantage of an asset allocation fund is that it allows investors to invest their money in assets such as equity, bonds, gold, commodities and cash. In this, the portfolio is automatically diversified, which reduces the risk.
What should an investor do in debt warfare?
Experts say that if you want to invest in debt mutual funds, you can choose ultra short term and short term funds. Some percentage of the money can also be invested in Mid Duration Funds. It is advisable to stay away from liquid funds and long-term debt funds. Returns have been spoiled in these. The reason behind this is that there has been a rise in the 10-year bond yield. However, RBI’s plan is to buy bonds aggressively. But the situation will be clear about this.
SIP What do investors
According to experts, if SIP is already running then continue it. At the same time, new investors can start SIP for long term in different categories of equity according to their need. On the decline in the market, it can also be made top-up.
(Note: Based on the views of BNP Fincap Director AK Nigam and Anirudh Saha, Senior Fund Manager (Equities), PGIM India Mutual Fund)
(Disclaimer: Investing in mutual funds is subject to market risks. Before investing, check at your level or consult your financial advisor. Financial Express does not recommend investing in any fund.)
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