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6 Tips to become a successful Mutual Fund Investor

Mutual fund investment is one of the best ways to get maximum benefits from the securities market in India. It was introduced with the aim to provide people an easy way to get the most from the market even without having much knowledge of the equities or debt market. Additionally, mutual funds provide investors with ample options to choose from and enjoy the various opportunities from different sectors of the market.

Although investing in mutual funds is fairly simple, many investors fail due to some common mistakes they usually commit. If you are planning to enter the mutual fund industry or even if you are an existing investor, follow these tips to make sure you become a successful investor.

1. Choose a scheme depending on your financial goal and risk appetite

Most investors choose a scheme depending on the returns provided by the fund. However, this is a mistake and one of the major reasons that several people end up investing in schemes that do not fit their risk appetite.

Also, most people discontinue their investments when they see unexpected movements in the returns. So, if you are looking for long-term benefits, it is important that you choose a scheme according to your financial goals and risk appetite. This will also ensure that panic less during market volatility and at the same time enjoy the maximum benefits it offers.

2. Avoid timing the market

The securities market is highly unpredictable and it is not a wise decision to predict its movement without extensive knowledge. It is observed that most investors start to time the market within a few months of being in the mutual fund industry with the aim of gaining more benefits.

However, it is seen that such investors end up with negative returns due to market volatility. If you are expecting higher returns and better benefits in mutual funds, it is important that you stay invested in for the long term. Also, if you are planning to make lump sum or additional investments, make sure you do not pull –out your investments in a single go. Try and distribute your investment in small parts and then invest accordingly.

3. Have a diversified portfolio:

There are several categories and schemes that you can choose from in mutual funds. All these schemes follow a different approach and style depending on the risk associated with it. A common mistake most investors commit is that they pull out all their investment in a single mutual fund which increases the risk as well as the growth.

Therefore, it is imperative that you choose schemes from different categories and asset class based on your financial goals. Also, you must ensure that you neither under-diversify nor over-diversify your mutual fund portfolio as it may have an adverse effect. You may consider seeking advice from expert financial advisors and select a mutual fund portfolio based on your financial goals.

4. Review and Re-balance your portfolio on a regular basis:

For hassle-free growth, it is important that you review your mutual fund scheme on a regular basis. It is recommended that you track your investments and check their performance at least once in six months. In case any of your schemes is underperforming or lacking behind compared to other schemes then you may consider switching to a different scheme.

5. Explore the various opportunities in the mutual fund industry:

You can choose from among the several options available in the mutual fund industry. Each scheme has a different type of growth and offers different benefits. The best examples are ELSS funds from the equity category and liquid funds from the debt category. ELSS offers tax benefits of up to Rs.1.5 lakhs in addition to the high growth while liquid funds provide benefits of a savings bank account with much higher growth. It is therefore recommended that you list out all the options before investing in mutual funds.

6. Increase your SIP amount:

You may stick to the same investment amount while investing for the long term. However, this may not provide you with great growth. If you want good growth from your mutual funds, you must increase your SIP amount every year. You may increase the amount by 5 or 10% depending on your salary increment.


Follow the above-mentioned tips if you want to become a successful mutual fund investor and enjoy exceptional growth. In case you are beginner, you may consider seeking advice.

These are the major tips which you should follow if you want to become a successful mutual fund investor and enjoy an exceptional growth from the mutual fund industry. In case you are a beginner and want to start your investment journey right way, feel free to connect with the experts who will provide you with the best options after analyzing your requirements.


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