Mutual fund portfolio: Strategies for ideal portfolio management
Mutual fund is one of the best sources of investment, especially for those who does not want to bear high risks. Here we are sharing important tips of best mutual fund portfolio and the mistakes which should be avoided while making such portfolio.
Every individual has different opinion for investment. Some people prefer risks while other doesn't like to invest in risky investment. That's why many people invest in Fixed Deposits (F.D.) to avoid risk while some invest in shares. Some people make a path in-between and invest in mutual funds according to their risk bearing capacity.
Portfolio is a combination of your movable and immovable properties. Portfolio includes bank deposits, PPF, EPF, bond, mutual fund, shares, house, land, etc. According to investment experts, nobody should invest at a single place. This increases the risk. Investor should invest his savings at different areas so as to reduce risks and increase returns. Such arrangement of portfolio for distributed investment is called Portfolio management.
Financial advisor provides their services related to right investment in return of nominal charges. They assist you in portfolio management of your assets. Nowadays, this service is also provided by some financial institutions. Ideal mutual fund portfolio
According to SEBI, 12 new mutual fund schemes are going to be launched shortly one-by-one. These companies are registered with SEBI after removal of Exit load. So let's move further where investors will learn online mutual fund portfolio.
1. Mutual fund plans investing in both shares as well as debentures are called balanced mutual funds. Investors with low risk bearing capacity should make investment in them.
2. They can also be a source to save tax. There are many mutual funds which provided tax exemption on your investments.
3. Retired people should invest in guilt fund as it is very secure. (Mutual fund schemes doing investment in government securities are called 'Guilt fund'.)
4. Investor should not purchase funds of lower NAV (Net Asset Value) as it is not a prudent act. Rather investor should purchase the funds which are earning good profits year after year.
5. If you receive a huge sum of money (like Rs. 2-3 lakhs) from any source, then do not make investment without making a proper decision and without a good portfolio, else you may suffer losses or get fewer returns.
6. Some companies run Systematic Investment Plan (SIP) schemes. In such type of plans, investor has to deposit a certain sum of money at monthly/ quarterly/ half yearly/ yearly intervals. This generates the habit of regular savings among people as well as risk is reduced due to its division into many intervals. But the right time of SIP investment is during bear market conditions or when stock market index is falling down.
Let's take an example:
Suppose you have Rs. 1 lakh to invest in MF and NAV of fund 'A' is Rs. 10. In such a case, if you invest in option 'A', then you will 10,000 units for Rs. 1 lakh. If NAV increases to Rs. 14 after 2 years of investment, then you will get compound annual return @ 18.3%. On the other hand, if you will invest the same amount of Rs. 1 lakh in fund 'B' with NAV of Rs. 50, then you will get just 2000 units. Suppose, if the NAV of option 'B' increases to Rs. 75 after 2 years of investment, then you will get compound annual return @ 22.05%. Of course, our investors are wise enough to decide themselves that which is better to invest in above example- option 'A' or option 'B'.Precautions in portfolio management
Most of the investor commit following mistakes in portfolio management:
- Wrong evaluation of individual risk bearing limit and capacity.
- Purchasing shares of more than 15 different companies.
- Sale or purchase of shares of different companies in haste.
- Sale or purchase of shares at wrong time.
- Avoiding advice of financial advisor at the time of making portfolio or doing investment.