How to make more money by investing in mutual funds?

With high income at their disposal, many are inclining towards stock markets to invest and rake in the moolah. But, some of them shy away, as they are not aware of the market, but they can rely on a Systematic Investment Plan, commonly referred to as a SIP, as it allows you to invest a small sum regularly in a preferred mutual fund scheme.

Hyderabad: With fluctuations in stock market indices, many want to follow the strategy of selling the units at higher prices and reinvesting when they come down. There is nothing in the stock market that is the right time to invest and withdraw that amount. The investment amount has to be withdrawn only in certain special cases. This is especially true in the case of mutual funds that are invested periodically.

Mutual Funds investment plans: A Systematic Investment Plan, commonly referred to as a SIP, allows you to invest a small sum regularly in a preferred mutual fund scheme. So, start investing in mutual funds to achieve a financial goal. You should continue to invest regardless of market fluctuations until that goal is reached. However, as your intended goal approaches--you need to set up a risk reduction for investment--if you raise the required amount earlier than you thought .. that amount can be withdrawn from equity funds. Either periodically can be diverted into liquid funds or can be converted into flexi deposits in the bank. The process should start two to three years in advance after a long-term investment. Then there will be no trouble if the markets fall.

You try to switch over to a dividend option when you want to earn regular income from mutual funds. Instead, you should try to withdraw periodically so that you can reduce the tax burden.

The fund scheme has an impact on your risk tolerance ability when you move to a new segment instead of the existing strategy when you choose. This is something that should be noted if the fund manager changes. The performance of the new fund manager should be monitored for at least six to 12 months. Funds may be withdrawn if performance is not good compared to the past.

Some schemes may not show positive performance even after two or three years. Then do not think of withdrawing investments instead check how is the fund performing in different periods and what are the returns of other schemes in the same segment? How is the performance compared to the standard index? If the equity scheme is not performing well for three consecutive years then get rid of it.

You should always adhere to diversity in investments and allocations should be in line with your goals. If the value of your equity investment increases due to growth in the market .. you need to adjust it to the ratio you thought of earlier. For example, suppose you want to have 65% in equities and 35% in debt. If the investment in the equity market grows from 65% to 75%, you need to adjust them to the desired ratio.

You can withdraw the required amount from mutual funds in an emergency, but this should be seen as a last resort. If it is not possible to continue the SIP, it can be suspended. Withdraw as much investment as necessary and choose schemes that do not perform well first and then look for ones that work well.