Sunday, May 29, 2011

Why investing in Mutual funds is better?

Investing is the best way to tackle inflation and get good returns with passive investment style is Mutual funds. Mutual funds gives you instant diversification with ZERO entry load. There are numerous types of mutual funds according to each and everyone's requirements and one can choose which one choose their investment style best.

Best site to choose the Mutual funds is:

one can choose a good rated fund from value research online and invest according to their asset allocation style. As Mutual funds gives instant diversification, risk is diversified and one needn't have to worry about putting all eggs in single basket. Also, it will be maintained by a financial professional, a fund manager and he would involve himself in getting good returns to the fund.

This would mean certainly, Mutual funds are less riskier than direct investment in Stocks. SIP (Systematic Investment Planning), Keeping yourself invested in every month in the fund with small amounts of money, thereby present in the market all the times, is one of the best strategy one can follow along with investment in Mutual fund to get good returns.

Example 1:
You can put Rs.50,000/- as one shot in HDFC Top 200 Mutual fund. (When the market is high, at this point, you may well lose your opportunity to get units at lesser price)

So, its always better to be always present in the market all the time with the help of SIP as mentioned in Example 2.

Example 2:
You can put Rs.5000/- every month in HDFC Top 200 Mutual fund. (This way, you remain invested at all times of the market, irrespective of the market conditions)

Its hard to time the market. And I would prefer Example 2 for starters in the Stock marketing world. If you can time the market, well go ahead with Example 1.
What do you prefer?

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