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Tuesday, November 30, 2021

Mutual Fund Investment: Investing in mutual funds for the first time, so do not make these mistakes even by mistake, otherwise money can be lost

Buoyed by the market rally, a first time investor should not invest heavily in the equity segment of Mutual Funds (MFs).

Mutual Fund Investment: It is said that no one should measure the depth of water with both his feet. Similarly, fueled by any market rally, a first time investor should not invest heavily in the equity segment of Mutual Funds (MFs). Investing in mutual funds demands patience and a better understanding of risk. However, considering the plethora of investment options in mutual funds and the current market conditions, choosing the right fund is not easy. Still, if you keep in mind some basic precautions related to investing in mutual funds, then you will not incur losses.

First-time investors usually start equity investments in a high market, but by that time the existing investors have already made a substantial amount of money. Experienced investors usually invest when the market is weak. First time investors do not know about this. Therefore, while investing in the equity market for the first time, investors should take a cautious approach by investing in low-risk funds. Along with this, investors should also try to understand the ups and downs of the market. It is important for a first-time investor to keep these things in mind while investing in equity-oriented funds.

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Never invest large sums of money at once.

An investor should avoid investing large sums of money in equities all at once. This is because a fall in the market can create problems for you. First-time investors do not understand the ups and downs of the market. In such a situation, they get nervous when there is little loss. In this panic, new investors often decide to withdraw their money, due to which they have to bear the loss. Hence, it is always advisable to invest in equity-oriented funds through a Systematic Investment Plan (SIP).

Invest in low risk funds

To get accustomed to market volatility, it is better for first time investors to go for balanced funds rather than pure equity funds with high risk. New investors should invest in such funds where the risk is low or may not be high. Such funds tend to have less volatility than pure equity funds during market volatility. This does not create a panic situation for new investors. With this, new investors can stay in the market for a long time and understand the ups and downs of the market. Hence, instead of starting with high risk pure equity funds, it is better to invest in funds which are comparatively less risky.

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Do financial planning before investing.

If an investor starts investing in equity-oriented funds to achieve long-term goals through proper financial planning, the chances are high that the investor will stay in the market for a longer period of time. Investors looking to invest for long term goals tend to ignore minor fluctuations in the market. On the other hand, new investors who invest in order to get instant returns, get scared of the fluctuations of the market and withdraw their money immediately. Hence, it is better to do financial planning before investing in which category of funds to decide how much to invest.

(Article : Amitava Chakrabarty)

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Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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