Investors often wonder when to invest in mutual funds. Little do they know that there is no right or ideal time when it comes to investing in mutual funds. Although, an investor should try to invest in mutual funds at the earliest. An investor can choose to invest any day they like. Before choosing a mutual fund scheme, an investor should try to take into various factors such as investment horizon, their risk appetite, financial goals, etc. In short, these parameters should align with their investment options. This article aims to serve as a mutual fund investment guide for all investors- new or experienced.

Mutual Funds

What is a mutual fund?

A mutual fund is a financial vehicle wherein a fund house or an AMC (asset management company) pools the money from several investors and invests it in varying securities such as bonds, money market instruments, stocks,  etc. The pooled investment is professionally managed by a fund manager.  The fund manager further invests it in a combination of debt, equity, cash and cash equivalents, etc. according to your financial portfolio. These managers hold an in-depth understanding and knowledge of the volatile markets. In return, the fund houses charge a small expense ratio i.e., the annual maintenance fee to manage mutual fund investments.

When is the best time to invest in mutual funds?

Mutual funds have gained massive popularity among retail investors owing to its flexibility. There has been a mounting acceptance to invest in mutual funds online due to the accessibility of several types of mutual funds that cater to the varying needs of investors across all risk profiles. Today, investors are not only curious about the right mutual fund to invest in, but also concerned about the ideal time to invest.

There are no rules and regulations regarding that mutual fund investors ought to be earning individuals. Yes, you heard us right. Even students can invest in mutual funds. There is no ideal time for investing in mutual funds. Investors can make investments in mutual funds as and when they desire. But it is always preferred to catch the mutual funds at a lower NAV (net asset value) rather than a higher price. It will not only help to maximise your returns but also lead to better wealth accumulation over time. The following are three ideal scenarios that are suitable to invest in mutual funds:

a. Bond yields are surging to be the highest

b. Stock markets have hit the rock-bottom

c. Development in the realty sectors has leapt

Any or all of the above situations represent an ideal scenario, but in reality, this time never comes. Or if it does, one isn’t able to map it accurately. It’s practically impossible to define this timeline. Hence, as an investor, you should not wait for these hypothetical situations and instead move forward to invest in mutual funds whenever you to. Happy investing!

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January 2021