Mutual Fund tips and tricks

Discover essential mutual fund tips and tricks for 2024. Learn how to maximize your investments, minimize risks, and achieve your financial goals with expert advice and strategies.
EXPLORE FUNDS
Mutual Fund tips and tricks
EXPLORE FUNDS
3 min
22-June-2024

Investing in mutual funds is a good way to leverage the wealth-creation potential of the Indian financial markets. Although these funds offer a more hands-off approach to investing, it is advisable to be aware of the various mutual fund tricks and secrets since they could potentially help you become more successful.

Can mutual fund tips and tricks help?

Mutual fund tips and tricks can provide valuable guidance and insights that can help you make informed decisions and improve your investment outcomes. In addition to helping you navigate the complexities of the mutual fund world, these tips and tricks can also assist you in managing your risk better.

Top 10 mutual fund tips and tricks for better investing

1. Past returns do not mean good future returns

When investing in mutual funds, it is crucial to understand that past returns do not guarantee future performance. This is because market conditions and economic trends can change rapidly, affecting the performance of a fund. Therefore, it is essential to evaluate a fund's current performance and its investment strategy before making an investment decision.

2. Lower NAV is not always better

The Net Asset Value (NAV) of a mutual fund is not always a reliable indicator of its performance. A lower NAV does not necessarily mean that the fund is better or more profitable. It is essential to evaluate the fund's performance over a longer period and consider other factors such as the fund manager's track record and the fund's investment strategy.

3. Investment value can go down, but that’s okay

Investing in mutual funds involves risk, and the value of your investment can fluctuate. It is essential to have a long-term perspective and understand that market fluctuations are a normal part of investing. Instead of focusing on short-term gains, it is crucial to focus on your financial goals and the overall performance of your mutual fund portfolio.

4. Timing the market is hard, keep investing

Timing the market is extremely challenging, and even professional investors often struggle to do so. Instead of trying to time the market, it is essential to adopt a disciplined investment approach and continue investing regularly. This helps to reduce the impact of market volatility and ensures that you are well-positioned for long-term growth.

5. Returns are more important than expense ratio

While the expense ratio of a mutual fund is an important consideration, it is not the only factor to consider. The returns generated by the fund are more critical in determining its overall performance. Therefore, it is essential to evaluate the fund's returns over a longer period and consider other factors such as the fund manager's track record and the fund's investment strategy.

6. Small increase in investment amount can make a big difference in returns

Even small increases in investment amounts can make a significant difference in mutual fund returns over time. This is because the power of compounding can lead to substantial growth in your investment. For example, a small increase of 1% in your investment amount can result in a significant increase in returns over a 10-year period.

7. ELSS mutual funds are one of the best ways to save tax

Equity Linked Savings Schemes (ELSS) are a type of mutual fund that offers tax benefits. These funds allow you to save up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act. ELSS funds are an excellent way to save tax while also generating returns through investments in the stock market.

8. Keeping money in the bank is like losing it

Keeping your money in a savings account can result in a loss of purchasing power over time due to inflation. Additionally, the returns generated by a savings account are typically low, which means that your money may not grow significantly over time. Therefore, it is essential to consider investing in mutual funds to generate higher returns and keep pace with inflation.

9. There are mutual funds for nearly every kind of need

There are various types of mutual funds available, each catering to different investment needs and goals. For example, there are funds that focus on specific sectors or industries, while others focus on specific asset classes or geographic regions. By choosing the right fund, you can align your investments with your financial goals and risk tolerance.

10. All mutual fund companies are safe to invest

All mutual fund companies in India are regulated by the Securities and Exchange Board of India (SEBI), which ensures that they operate in a fair and transparent manner. Therefore, it is safe to invest in mutual funds from any reputable company, as long as you do your due diligence and evaluate the fund's performance and investment strategy before making an investment decision.

Conclusion

Implementing the above-mentioned mutual fund tips and tricks diligently should make you a better investor. That said, it is important to remember that conducting thorough research and staying disciplined in your investment approach is crucial to maximising your chances of success.

If you are looking for the right fund to invest in, the Bajaj Finserv Mutual Fund Platform can help you get closer to your goal. On the platform, you can find more than 1,000 different mutual fund schemes catering to all kinds of investors. Furthermore, you can also use the dedicated mutual fund compare tool to evaluate different funds across multiple aspects.

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Frequently asked questions

What is the best investment strategy for mutual funds?
The best mutual fund investment strategy is highly subjective and varies from one investor to another. In fact, the ideal strategy for mutual funds depends a lot on factors such as your investment objectives, risk profile and investment horizon, among others.
What is the 3-5-10 rule?
The 3-5-10 rule is something that financial planners and experts use as expected rates of return for different investment options. The rule states that the average rate of return on savings accounts is most likely to be 3%, the average rate of return on bonds is likely to be 5% and the average rate of return on equity stocks and equity mutual funds is likely to be 10%.
How do I invest smartly in mutual funds?

One of the many ways to invest smartly in mutual funds is to opt for a Systematic Investment Plan (SIP). By making a SIP investment, you can significantly boost the return-generation capability of your mutual fund through compounding. Additionally, you also benefit from lower investment costs due to rupee cost averaging.

What is the 30-day rule for mutual funds?
Many Asset Management Companies (AMCs) implement the 30-day rule to prevent excessive trading in mutual funds. According to the rule, investors who attempt to sell units of a mutual fund within 30 days of purchase are either restricted from doing so or are levied early redemption fees or exit loads. This is done to protect long-term investors’ interests.
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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer:

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form:

(ii) carry customized/personalized suitability assessment:

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

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Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.