Skip to main content

Risk taking ability should decide exposure to equity

Invest Mutual Funds Online

Download Mutual Fund Application Forms

ARE mutual funds among the most convenient vehicles to invest in equity markets? Not necessarily! Age is one of the primary criterions for investing in mutual funds. What matters more is your ability to understand what level of risk you can comfortably take at different times in your life. And finding a mutual fund that aligns with that level of risk hence, becomes more critical.

Today, mutual funds are able to serve the needs of both, an investor who is very conservative and wants minimal risk, and also who can take risk aggressively.


Of course, like with anything in life, the likelihood of higher returns is greater when you take higher risk and vice-versa.

For the very conservative investor, one can even start by investing in money-market funds which are less volatile and tends to offer better liquidity, compared with traditional investment option. On the other end of the risk spectrum are pure equity funds, that may be volatile in the short-term, but tend to offer much better returns over a longer investment horizon, compared with money-market funds.

So how do you decide what share of your investments should be in equity funds? There is an old thumb rule of investing which says that 100-minusyour-age can be your percentage allocation to equity mutual funds. The rest can be in funds with lower risk such as money market and debt funds.

However, with average life expectancy in India growing rapidly to 66 years in 2010, compared with 58 just 20 years ago, this rule of thumb now often gets challenged. In over two decades that I have been associated with advising clients, I have seen investors at the age of 70 feeling comfortable investing a greater share of their assets in equity funds, and seen young investors in their 30s favour lower-risk debt funds. In either case, one can argue that both investor types challenged traditional wisdom that the younger you are, greater the risks you can take.

What it implies is that both investors had a more developed appreciation of their respective financial goals taking into account the time they can stay invested, their experience with mutual funds as a category, the return they need on their capital and the risk they were willing to take to achieve their goals. All of the above, when combined, aims to make a comprehensive and confident investment decision.

It is also well known globally that mutual funds are amongst the most convenient vehicles to invest in equity markets.


The Indian regulator is keen to enable increased ownership of mutual funds beyond just the metros to the common man right across the length and breadth of India. This will not only help develop the Indian capital markets, but equally aims to give a more direct route to participate in the growth of corporate India and the Indian economy at large, thereby growing their wealth.

Regardless of their age, in my career, I have met investors who have never in vested in mutual funds, to those who actively invest in them. The former often hesitate because they do not know how to choose a fund from over 2000 choices that exist today, while the latter is often hassled with the administrative burden of keeping track of the performance of funds, filling subscription and redemptions forms, writing cheques and reconciling their bank statements.

To address both their needs, a new category of mutual funds has now begun to se are what are called multi manager funds. These researched funds aim to invest in the best of breed funds across the industry, thereby, eliminating the burden of selecting funds for the investors. To sum it up, age is but just one factor to take into account when investing in mutual funds. And there is never a substitute for gaining firsthand experience.

--------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...
Read more

ICICI Pru Constant Maturity Gilt dividend

Invest ICICI Prudential Constant Maturity Gilt Fund Online ICICI Prudential Mutual Fund   has announced dividend under the following schemes: Scheme Dividend ( R /unit) ICICI Pru Constant Maturity Gilt-DQ 0.26543239 ICICI Pru Constant Maturity Gilt Direct-DQ 0.27171609 ICICI Pru Q Interval Plan I-D 0.10617296 ICICI Pru Q Interval Plan I Direct-D 0.10703967 ICICI Pru Q Interval Plan I Ret-D 0.10617296             The record date has been fixed as June 13, 2016.   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) ...
Read more

NPS Investment Choice for Safe Investors

Invest NPS Online       Whether they invested through SIPs or put in a lump sum amount, risk-averse individ uals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9.75% annualised returns while corporate debt funds have churned out more than 11% in the past five years. As a result, the average return for ultra-safe investors in the past five years is in double digits. Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years.These funds have done well because interest rate cuts have pushed down bond yields. But experts say this trend will not stay forever. NPS is a long-term investment and the bonds are predominantly held to matu...
Read more

Buy Health Insurance Plan even if you are covered with my Employer

Buy Health Insurance Plan Online Yes, getting a private insurance cover now, which extends beyond your retirement age, is recommended There are a few reasons why buying a health insurance plan may make sense even though you get medical insurance from your employer. Here are the points you need to think about. Firstly, your employer's insurance coverage will only protect you as long as you are employed with the company. The policy will terminate when you quit the job or when you retire. Post retirement is perhaps the phase when one needs it the most but you won't have it then. Moreover, buying a new insurance policy after the age of 50 means that there will be no coverage for pre-existing diseases.   Lastly, health insurance policy you get from your employer may or may not cover your dependants. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver M...
Read more

SBI MAGNUM MIDCAP ONLINE

Invest SBI MAGNUM MIDCAP ONLINE   SBI MAGNUM MIDCAP fund didn't fare well in its initial years but, in recent years, has steadily improved its performance under the capable hands of its current fund manager. Although investing predominantly in mid-cap stocks, the average market capitalisation of its portfolio is lower than other category peers.   Although the stock selection approach is mostly bottom-up , the fund manager doesn't shy away from taking bold sector bets , as is reflected in its large exposure to the healthcare sector. She is equally adept at handling performance across market cycles--the fund has captured more of the upside during market upticks and contained the downside during downturns in a better manner than its peers.   Given its superior risk-reward equation, the fund is a worthy pick in its category.     ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing EL...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now