Sabyasachi Mukherjee, Associate Vice-President, IIFL, talks about the need to invest in mutual funds
Why should one invest in mutual funds?
Investing is a serious business and it requires a lot of dedication and time to analyze market and invest. A lot of people take chance and speculate, while some get lucky others don’t. This is where mutual fund comes in. Investing in mutual funds bring many advantages to an investor such as: Professional setup and management: Strong system and process and an experienced team adept at money management taking into account risk, return and liquidity aspects. Qualified professionals manage your money with strong research team and resources.
Asset allocation and portfolio diversification: Diversification lowers your risk of loss by spreading your money across various industries and geographic regions. It helps investor to mitigate the risk to a large extents and thereby allowing portfolio to get less impacted from the sudden adverse events.
Cater your investment needs: It helps investor to select from large universe of mutual investment basket based on his life stage and appetite for risk. Individual at 30 years of age has some objectives like wealth creation and individual at 60 years of age has some other objectives like regular income and investment safety. Mutual funds has designed investment product to cater such needs and manage it accordingly as per scheme objectives.
No large investment compulsory: Mutual funds allow you to make an investment, even if you have a very small amount to invest. This advantage makes it more attractive among investors.
Regulations: All mutual funds are required to register with SEBI (Securities Exchange Board of India). They are obliged to follow strict regulations designed to protect investors. All operations are also regularly monitored by the SEBI.
When is the right time to invest in equities?
The right time for investing in equities was yesterday, it is today and it is going to be tomorrow also. There are many data points which prove that equity investment is the best of asset class for long- term investment. It stands out among all asset class when it comes to outperformance relative to the other assets in long-term.
India’s nominal GDP size is set to double in the next five years; it will remain favourite among FII with equity market cap larger than most emerging markets.
India has witnessed a historic election mandate in 2014, not seen in the last 30 years, raising hopes of an accelerated policy response from the new government; action has begun on the ground. Hence, it is always any time is a right time for long-term investment into equities.
How can one track one’s growth and progress on a daily basis?
It is recommended for an investor to not track long-term investment on a daily basis as it encourages deviating from long-term investment goal if there is any sudden short-term gain. However, if one wants to track the progress on a daily basis then investor can look at NAV of a particular scheme on AMFI website or fund house website.
