Hemant Rustagi
Over the years, investors have had mixed experiences from their equity fund investments.
Though every investor would like to derive the maximum benefit from the potential of the stock market, not many are fortunate enough.
Needless to say, a combination of factors such as wrong selection of funds, poor fund performance, mis-selling and the tendency to time the market, result in unpleasant experiences from time to time.
No wonder, only a small percentage of investors in our country are invested in equity and equity-related funds at any given point in time.
The question, therefore, is whether the fault lies with equity funds as an investment option or with the approach followed by investors.
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How to invest in stock markets, MFs to your benefit
Image: Key is to look beyond short-term.Therefore, it is vital not only to make the right choices in terms of fund selection but also have the right mindset.
The key to success is to look beyond the short-term performance and invest in well-managed funds. It is also important to ensure the portfolio does not suffer from over diversification.
Many investors make the mistake of having too many funds in their portfolio.
A situation like this arises mainly because they chase short performance and end up investing in the very fund that gives good returns at some point or the other.
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How to invest in stock markets, MFs to your benefit
Image: Market volatility challenges patience and resolve.The stock market volatility challenges the patience and resolve of investors quite often.
It is quite common to see them grappling with the implications of market volatility on their portfolio as well as with the resultant indecision with regard to existing investments as well as to invest fresh money into equity funds.
Another challenge for equity investors is to handle the company-specific as well as the market risk efficiently.
Though, the company-specific risk is tackled by fund managers for mutual fund investors, market risk, that is, volatility risk has to be handled by investors themselves.
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How to invest in stock markets, MFs to your benefit
Image: Disciplined and long-term approach is needed.Though making regular investments does not guarantee profits at all times, a disciplined approach ensures that one continues to buy even in a falling market and benefit the most when the markets start moving upwards.
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How to invest in stock markets, MFs to your benefit
Image: Investing at lower levels can be profitable.Therefore, more money they invest at the lower levels, the lesser recovery they have to make to turnaround their portfolio performance.
On the other hand, investors who do not follow a disciplined approach often stay away from the markets during the turbulent times as they see a market downturn as a disaster rather than viewing it as an opportunity to invest at lower levels.
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How to invest in stock markets, MFs to your benefit
Image: There is a thin line between investing and gambling.Remember, there is a thin line between investing and gambling. Make sure you do not cross that line. It's time to also learn to say "no" to products you don't really want or need.
The author is CEO, Wiseinvest Advisors
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