Of course, the Stock market’s high and down can be a frustrating moment for new investors but it does not mean that we should take it as a gambling. If we invest without proper knowledge and advice in Equity mutual funds or the stock market, it may sometimes convert into gambling where we will be in a fix what to do and what not to do. Logically, one must take advice from the expert fund Manager to tackle your funds in the stock market. They collect money from the investors and invest in stocks. In mutual funds, if it is a first time for the investors then it will be better to look at Systematic Investment Plans (SIPs) for building long-term wealth. One can start it just by having a minimum amount of Rs. 500 which allows an investor to buy units on a given date each month. Moreover, the basic advantage of a SIP is that the investors do not have to time the market. Every month investment ensures that they are investing during the highs and the lows.
In a volatile market, it will be beneficial for you, if you opt SIP. When a scheme’s net asset value is low more units can be purchased and when the NAV is high fewer units are purchased but in the longer time frame, it will give average out the cost which will give you more benefits in terms of returns.
Here we have some advice for first-time investors in mutual funds
1. Start Investing with an IDEA
Even a single penny is very worthful if invested in a stock market or mutual funds so before doing that ask yourself, “What do I want to achieve?” Stepping forward with an Idea is the relevant process that enables you to achieve your goals. For example, if you have sat the aim to save Rs. 50,00,000 in 10 years then start with the end in mind and figure out “How much I will need to invest monthly to reach this goal.”
2. Portfolio Diversification
Investing is not just confined to the stock market but try to get rich quick by putting all your money into a few hot stocks will almost certainly fail in the long run. The long-term path for wealth creation is to build a diversified portfolio of stocks, bonds and a range of other assets classes.
3. Elaborate your Financial Goal
It is always advisable to know before investing that for “whom you are investing?” All your investment should be aligned with your any specific financial goal whether it is your retirement or child education or home improvement. Once the goals are sat, you can project how much-expected growth they need to achieve these goals. Moreover, along with risk tolerance, it will drive asset allocation and exposure to parts of the stock market.
4. Persistence with your investment
It is not mandatory that the results would be magnificent from the very first day 1. At an initial point, you may lose some money. But don’t lose heart, take heart and Invest regularly. In any process, consistency, and discipline are the two things of success.
5. Start Investing Early
The famous well-known statement, “The earlier you start, the easier it is to build wealth” made us more enthusiastic to reach the inflation-adjusted corpus you need to start early for your investment, you will end up far richer when you begin investing early. It is all due to compound interest and the outcome differentials are staggering.