9 Rules of Investing through Mutual Funds
(1) Know yourself Quantify risk which you are willing to take, consider time horizon for which you want to invest money and set financial goals (2) Saving work for you Set goals and plan accordingly. Give enough time to make investment decisions, otherwise money will lie idle in bank accounts or get invested in products pushed by sellers. (3) Select Asset Class Identify proper Asset class which helps to achieve various financial goals (4) Impact of Inflation Inflation reduces purchasing power of money and let us know the return required to maintain same standard of living. So you need to invest savings in asset class which generates higher tax adjusted returns. (5) Impact of Taxation Always calculate tax adjusted return which different asset class provides before taking investment decision. (6) Mentality Do not get influenced by market behavior, don’t jump on investment bandwagon when everyone is buying and don’t press panic button when everyone sells into market (7) Diversify Portfolio across various asset class If we put all investment in same asset class and that asset class falls, then you are at greater risk, but if your investments are well diversified across various asset classes than loss from one asset class can well be set off from gain. (8) Give time for money to grow Create wealth over long term only when you give enough time to asset class to perform. (9) Review Periodically Review portfolio periodically and its progress towards achieving various financial goals
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