Five Mistakes Mutual Fund Investors Should Avoid In This Market

Spare Cash – Equity Schemes – Long-Term Prospects

Several investors of mutual fund, particularly the new ones tend to be apprehensive since the market seems to be suspended around past pea. Discussions of expensive valuating, liquidity driven rally etc. tend to make them anxious with regard to their investments. Several of them have been probing with their advisors of mutual fund regarding their investments.

 As per the advisors, they have been cautioning their clients from engaging in certain errors which they state could occur in a risking market such as the prevailing one. When the market is said to be on an upsurge, several investors of mutual fund seem to get excited and if in a position to do so, would not hesitate to put their money in equity mutual funds particularly in the group that tends to offer the highest returns.

However, this could rebound greatly. It is advisable to stick to ones goals and allocation. If one tends to have allocated money to equity schemes for long-term financial goals, they should stick to it. It is not necessary to change your investment plan because the stock market has been crushed. You could invest spare cash in equity schemes which tend to have long-term prospects. You could also make planned allocation when the need for big correction arises.

Reversal Trends – Investor Panic

However, one should refrain from making huge changes to their original investment plan and go heavy on equity schemes. One need not get apprehensive when there is excitement in the stock market. Some of the investors seem to get anxious when there are talks regarding the performance of the market.

Even the smallest indication of reversal trend in the market tends to make these investors to panic from the market which is not the appropriate attitude for investment. If one intends to invest with a long prospect, they tend to go through several phases in the market scenario which cannot be avoided. One needs to be firm and stick to one’s financial plan.

The treat to Fed rate cut is expensive valuations, imminent correction and liquidity-driven rally. Market is never short of talking points and experts enjoy discussing every frayed topic. But an investor of mutual fund does not have to be perturbed by all this topics provided by experts. Most of the issues are relevant to clients only who tend to build position daily in order to en-cash on these types of news.

Essential Information Forming Knowledgeable Opinion

Most of these earth shattering events seem like minor problems when they are considered after a long period of time. Buying and selling should never been undertaken in an impulsive manner. Several of the investors tend to make it a habit of indulging in it immediately after an event or news breaks out and believes that it would change the luck of their investments.

These types of errors should be refrained. One needs to step back, consider the topic and get into discussion with your advisor, friends or colleagues with those who could be familiar with these sorts of issues. One should not involve in anything till you have all the essential information in forming a knowledgeable opinion.

Buying and holding is the only strategy which tends to work though it could also be a boring one for some and a segment of the market is always on the lookout for some fancy ideas which could be helpful. At times it tends to get difficult to resist from betting on the theme since it could be widely hyped as being the magic formula in multiplying money and one should refrain for the same.

Save tax by investing in Mutual Funds

Mutual Fund – Substantial Returns

A collective investment in the form of mutual fund is professionally handled fund and investing in it could maximise the savings as well as receive substantial returns. As an investor, one needs to identify the needs and goal for the investment which could be in funding for a child’s education or retirement or a secondary income. In identifying the goal one could opt for the most appropriate investment options and reap the benefits. Tax savings mutual funds are known as Equity Linked Saving Schemes – ELSS wherein the main objective of these funds tends to provide a tax rebate of the Income Tax Act under section 80C and are also exempted from taxes for long term capital gains. Tax rebate from one lakh INR to 1.5 lakhs in 2015 had been increased by the Government of India. For ELSS, the minimum investment tenure is 3 years and if the fund tends to do well it could offer benefits of around INR 1 lakh. ELSS funds are offered 13% to 22% returns annually averaging to around 17.5%. Due to these reasons ELSS seems to be one of the topmost tax saving mutual funds of 2015. Besides this, other popular tax saving investment comprise of –

• Tax Saving Fixed Deposit wherein one could benefit up to 1 lakh INR though the interest which is earned from fixed deposits tend to be taxable 
• National Savings Certificate – NSC – which enables investments as low as INR 100 with a rate of interest of 8.5% for a period of 5 years and 8.8% for 10 years wherein one could save around INR 1 lakh with this scheme. 
• Home Loan Principal – under section 80C, principal amount on home loan qualifies for a maximum deduction of INR 1.5 lakh. However the same is not applicable for properties under construction as well as commercial properties. 
• Rajiv Gandhi Equity Saving Scheme – RGESS is a good choice for first time investors since it tends to offer tax savings of around 50% on the invested amount for the first year. Maximum deduction is INR 50,000 which can only be claimed by those whose annual incomes falls below INR 10 lakhs.

ELSS – Long Term Investment

ELSS seems to be a better investment plan due to its comparatively minimal lock in period of 3 years over Public Provident Fund – PPF which tends to be locked in for a period of 15 years. National Savings Certificate – NSC on the other hand is locked in for a period of 6 years and fixed deposits are locked in for 5 years. Moreover, ELSS could offer enhanced returns over the long term since it is an investment in equity markets. Prior to investments one needs to be well informed on the risks and expenditures associated with mutual funds. Some insight could be beneficial to the investors such as –

• Considering the prevailing financial situation of the market intending to invest in 
• Select an experience fund manager who is well versed in delivering good results, one who will keep you informed on the anticipated trends as well as prospects of the fund in the market 
• The prevailing performance of the mutual fund need to be investigated to lessen probable risks and look out for premium, mutual fund rates as well as consistency of the fund in the market 
• Match the returns of the fund with the other tax saving investments 
• Discover hidden expenses like the fund manager’s commission, marketing expenses and the other expenses.

Mutual Market Funds Play a Leading Role in the Industrial Field

The money market funds would become a positive aspect for the investors utilizing which they can establish a better economic backdrop.

The users can seek the advice of the experts that would help them to acknowledge the real time benefits. Manifold schemes exist here that include the long term and short terms options according to the users’ needs.

Also, it is necessary to understand that the organization provides the suitable security measures. After you understand the complete procedure, take the right decision with an intention to develop a suitable future. Initially, you need to fix the goals and proceed accordingly recognizing the beneficial solutions.

The Proposals from SEC

SEC comes out with the positive approaches that help you to acknowledge the original benefits fulfilling all your desires. Therefore, you need to stay updated with the recent information regarding the particular topic.

According to the recent proposals from SEC, the users can withdraw up to $1 billion within a day. It helps you to accumulate the large volume of assets representing your hard work. However, before you invest go through the terms and conditions carefully ensuring that you are at the right destination where you would receive the customized features.

Know the risk factors that need to understand before you go ahead recognizing the features that would improve your monetary condition. SEC depicts the strict rules and regulations that you should follow maintaining the suitable milieu.

Analyze the Situation

It is important that once you analyze the overall situation that would help you to acknowledge the feasible solutions free from any glitches. Get familiar with the complete system knowing how to utilize the money market funds. Recently money market recognizes manifold positive features along with the effective revolution.

Hence, the organizations impose the new terms of that provide the feasible opportunities to the users. Make sure that you comprehend all the features correctly ensuring the suitable investment earning better resources. It safeguards the hard-earned money of the users and thus you would not lose the treasures. In this respect, you can even communicate with the person who gains ample knowledge on the subject matter.

The banks and other financial institutions incorporate the revised rules that represent the smart features. Once, the users understand the significance of the new format they would move further. So, you can become the successful business entrepreneur accumulating all the optimistic approaches sustaining the modern trading opportunities.

Avoid the Risky Circumstances

Alongside, you also have to eliminate the risk factors that would ensure the flawless execution of the business activities. Therefore, you are able to incorporate the suitable features that would enhance the overall infrastructure.

It shows that mutual funds come out with the feasible attributes that meet the entire demands of the users. Pay attention to the share prices and other features that would enable you to select the accurate option without any confusion. Also, know the time limit that ensures you the delivery of the customized features. Eliminate the difficulties and recognize the positive approaches establishing the suitable set up.

Mutual Funds or Stocks?

Many Investors have doubts about whether to invest in stocks directly or in Mutual funds. If we can analyze the performance of the Mutual during the Bull Markets and Bear Markets, it would give a clear answer about it.

The present bull market started around 2003 and ended in 2008. The Mutual funds performed well during that period but still their performance lagged behind the performance of Stock Indices. In India, Bombay Stock Exchange Index Sensex appreciated by seven times. But no fund appreciated by seven times in this time. If we take into consideration some well performed sectors like, Reality, Power and Infra, the performance of the funds is far more less, which clearly indicates, Mutual funds have not performed extraordinarily. They have performed as an ordinary investors do.


Had an Investor invested directly in stocks, he would have multiplied his money manifold. So, Mutual fund Managers are not smarter than us. I prefer investing in Stocks directly instead of Mutual funds.


But investing directly in stocks do have some risks. Had anyone invested in Hindustan Unilever in Bse or General Motors in USA, he would have not seen his investment appreciate far the last five years. So, picking the right sector and right stock is more important in investing. Any secular bull market will sustain for five years to ten years. Always hold your investments till the bull market is over. Don’t shuffle your stocks in your portfolio frequently.

If one can follow the rules propounded here, then one can prefer stocks over Mutual funds.

Which one do you prefer?